But amid the fierce debate between business groups and environmentalists, Prime Minister David Cameron promised that he won't expand Heathrow before the 2015 election.
Heathrow—Europe's busiest airport—is operating at full capacity with 1,300 landings and takeoffs every day. Some business groups fear an inability to add flights, particularly to China and growing economies like Brazil in South America, will dent Britain's competitiveness.
"We need to establish a form of review that will bring parties together and make a decision about airport capacity," Cameron told the House of Commons. Aides said the inquiry would be unlikely to announce findings before 2015.
Britain's previous Labour government had approved a third runway for Heathrow in 2009 despite loud opposition from locals.
Cameron canceled the project when he formed a coalition government in 2010 but is now under pressure from the business sector and some of his fellow Conservatives to reverse that decision.
Conservative legislator Tim Yeo recently challenged Cameron to back a third runway at Heathrow immediately and show "whether he is man or mouse.
A study published by the British Chambers of Commerce earlier this year claimed that a third runway would add 30 billion pounds ($48 billion) a year to the U.K. economy, and that every year of delay could cost the nation about 1 billion pounds ($1.6 billion).
Analysts see the inquiry, and Cameron's decision Tuesday to replace Transport Secretary Justine Greening and her deputy—who both opposed a third runway—as setting the stage for a policy change after the 2015 election.
London Mayor Boris Johnson, a leading Conservative, urged the prime minister to rule out an expansion of Heathrow and dismissed the planned review.
"It's just a fudge, it's just a fudge-arama, and it's just an excuse for a delay," Johnson told BBC radio. "There's almost three years to run until 2015. If such a commission were not to report until after the next election, we'd have lost a huge amount of time."
Johnson favors building an entirely new airport east of London with four runways on a platform in an estuary of the River Thames.
Critics of the Heathrow option say the airport is too close to homes and additional flights would cause unacceptable noise levels. Other opponents cite environmental concerns.
British Airways, Heathrow's biggest user, said it hoped that Cameron was recognizing the constraints posed by London's runways.
"We hope that this signals that the government is now serious about tackling urgently the hub airport capacity issues facing the U.K.," the airline said.