The government is warning air fares could rise dramatically unless there is more airport capacity in the South East of England.

Officials estimate under-capacity could cause a rise of more than �100 on return flights to many destinations.

Transport Minister John Spellar says failing to meet long-term demand could drive tens of millions of passengers away to European airports.

Mr Spellar's paper to a conference on airport capacity suggests Heathrow, Gatwick and Stansted will all be put forward as possible locations for new runways.

The suggestion will be in an upcoming government consultation paper.

Economic benefits

Ministers will also spell out details of "generous compensation" for people worst affected by new runways in the paper.

Expanding South East airports could produce economic benefits of more than �15bn to the UK economy, the government believes.

The consultation paper will also present options for a new airport on Cliffe Marshes in north Kent.

But the site will be controversial, with the Thames regarded as one of Europe's most important estuaries by the Royal Society for the Protection of Birds (RSPB).

But supporters of the Cliffe site say it would allow 24-hour flying with less of a noise problem and fewer homes demolished.

Environmental impact

Aviation industry leaders are pressing for the next runway in the South East to be built at Heathrow.

But it would cause huge environmental impact, including the demolition of hundreds of homes and aircraft noise for tens of thousands of people.

Sources close to the government believe the hurdles at Heathrow are too great.

They say that Stansted, where there has been rapid expansion of the low cost airlines, could emerge as the most likely location for the next runway in the South East.