Heathrow's controversial Terminal Five development could be given the go-ahead as early as this week.

BAA, the privatised airport operator, will be given permission to carry out the development providing it keeps to a commitment that noise levels can be pegged to 1994 levels, according to the Sunday Times.

The formal approval could come in a Commons statement made as soon as this week.

The BAA strategy relies on new aircraft becoming quieter and bigger, enabling more people to use the airport without increasing the noise levels for those living under the flight paths.

Last week transport minister Stephen Byers said: "I decided some considerable time ago that because terminal five was so important, I uniquely would actually announce a planning inquiry by way of an oral statement to parliament."

If the reports prove correct, the announcement will not be welcomed by environmental campaigners.

Friends of the Earth argues that BAA's commitment does not take account of the growth of low-cost budget airlines, though the company responds that Heathrow is becoming a hub for trans-Atlantic and Asian flights, rather than short-haul European flights.

Moves to encourage passengers to use public transport to get to Heathrow and a reduction in the overall size of the terminal project are also being considered by ministers.

The decision follows a long-running public inquiry into the project, which is opposed by local residents. Experts say that it is unlikely that work on the site will begin before the year 2003 and delays caused by any judicial review of the government's decision could push the date back further.