The project, known as the City Airport Development Programme, will allow the airport to extend its existing passenger terminal, create seven new aircraft stands to cater for larger aircraft and add a new taxiway.

New transport secretary Chris Grayling and communities secretary Sajid Javid formally gave the green light for the project today. Former London mayor Boris Johnson had previously blocked London City’s expansion attempts.

The airport said the expansion will allow it to increase capacity to 6.5 million passengers per year by 2025 by allowing an extra 32,000 flights – 4.3 million people used the airport in 2015.

London City’s chief executive Declan Collier said: “As the airport serving by far the highest proportion of business travellers in the UK (52%), who do some £11 billion of trade in Europe annually, today the government has sent a strong message that London and the UK are very much open for business. 

“I welcome the decision and look forward to delivering new airport capacity for the south-east by 2019.”

The privately funded project is expected to create 1,600 airport jobs, and could generate up to £1.5 billion to the UK economy by 2025.

The development will allow more flights to use the airport at peak times and open it up to newer and bigger aircraft.

Chancellor Philip Hammond said: “London City Airport’s ambitious growth plans will boost international connections, strengthening the City of London’s links to destinations across the world, and send a clear signal that Britain is open for business.

“Making it easier to visit and do business in the City of London will help drive forward our economy and further strengthen the city’s status as the world’s leading financial centre.”