Terminal 5 has allowed BAA to reshape its Heathrow operations

The airport's operator, BAA, said a new terminal would be built on the same site, with work starting in 2009.

The building is intended to complement the �4.2bn Terminal 5 which is already under construction.

The proposal needs to win regulatory support from the Civil Aviation Authority before it can go ahead.

BAA will also discuss the viability of the plans with airlines and intends to submit a planning proposal in 2007.

Radical new plans like the one BAA has outlined today are long overdue Steve Ridgway, Virgin Airlines

Under the "Heathrow East" plan, BAA will knock down Terminal 2 and the Queen's Building office block next door.

BAA said the proposed new terminal could handle 30 million passengers a year and would be used by airlines including Virgin, Lufthansa, Singapore Airlines and BMI.

Easier

Analysts said the proposals were unlikely to run into the trouble experienced when plans for Terminal 5 were unveiled because BAA would be building on the site of existing premises.

"The significant increase in capacity created by Terminal 5 gives us a once-in-a-lifetime opportunity to look at the rest of Heathrow and think creatively about how we can use our current very limited space better," said BAA managing director Mike Temple.

"We are excited by the idea of Heathrow East, but at the moment it is still just an idea. Our vision is to create the world's greatest international hub airport in the world's greatest city."

Virgin Atlantic chief Steve Ridgway welcomed the move saying it would make the airport much easier for passengers to find their way around.

"Radical new plans like the one BAA has outlined today are long overdue. We look forward to seeing BAA develop these proposals," he said.

The news comes almost two weeks after BAA - which operates seven UK airports as well as Naples airport in Italy - announced it was axing 700 jobs as part of a cost-cutting drive aimed at saving �45m a year by 2008.