The airport specialises in the budget flight market

Aviation Minister David Jamieson announced the investment at Liverpool John Lennon Airport on Thursday.

Passenger numbers are expected to increase by 50% to 4.5m a year in 2006 as a result of the plans.

The airport, which specialises in budget flights, is expanding following a 17% rise in the low-cost market in 2002.

The terminal will be enlarged and its facilities improved while extra runway, aircraft taxiing and parking space will be created.

'Proven demand'

Public transport to the airport, in Speke, will also be improved.

Mr Jamieson said: "There is a proven demand for regional airports, especially ones used by low cost companies.

"The long term commitments to Liverpool secured from both easyJet and Ryanair give John Lennon Airport a very bright future and one which this investment will enhance.

"The creation of more than 700 jobs will be a significant boost to the local economy and building a better airport will help drive further the successful regeneration of Merseyside."

Budget airline easyJet signed a 20-year deal at the airport in 2001 while its rival Ryanair agreed a 10-year deal in 2002.

The plans were approved after the airport secured �5.25m in regeneration cash from the European Union.