A 30-year concession has been signed by the airport's owner, Luton Borough Council, with a British/American consortium of banks and investors.
Barclays Private Equity has taken a 32.5 per cent stake, along with Barclays UK Infrastructure Fund plus Airport Group International (25 per cent) and Bechtel Enterprises (10 per cent).
A newly created management company, London Luton Airport Operations, will immediately take over employment of all staff.
The airport handled a record 3.4 million passengers in the year to 31 March. The first phase of the development programme will expand the airport to handle up to 5 million passengers a year.
This is said to be the first occasion on which a private/public partnership of this kind has been created to fund airport development.
Frank Pullman, the chief executive of the airport, said that the deal would allow London Luton Airport to meet the travel demands of the future.