The line is due to start operating in 1997 and will cut the journey time to 16 minutes. Peak hour services will run every 15 minutes.
BAA, owner of Heathrow, will have a 70 per cent stake in the project with British Rail holding the other 30 per cent, although operation of the link will probably be put out to private tender.
Agreement on the project has been held up by a long-running dispute between BAA and BR over how the financing would be split and the charges BR wanted to levy for access to its track.
John MacGregor, Secretary of State for Transport, has been increasingly anxious to get at least one high-profile project approved to counter the gloom over delays to other rail schemes.
The announcement will enable the Chancellor to demonstrate that his pledge in the Autumn Statement to encourage joint public and private sector infrastructure projects is bearing fruit.
The 15-mile link will run on BR's existing western main line from Paddington for 11 miles before branching off at Hayes, west London, into a four-mile tunnel to the airport. There will be two new stations at Heathrow - one to serve terminals one, two and three and one for terminal four.
The link will be extended to Heathrow's new terminal five, due to open early next century.
About pounds 20m has already been spent on engineering studies. Once funding is in place BAA and BR will form a limited company to take on the project. In the long term BAA may look to bring in other private sector partners.Reuse content