Blair and Brown split over location of new runway for the South-east

A deep split has emerged between Tony Blair and Gordon Brown over the site of an airport runway in the South-east, with the Prime Minister backing expansion at Stansted and the Chancellor supporting Heathrow.

With two months left before the Government announces the location of the first new runway in the region for more than 50 years, the issue is threatening to divide the Cabinet.

The Treasury argues that the economic case for the west London airport is overwhelming, based on estimates suggesting a runway there would earn at least £16bn more than one at Stansted. But privately Number 10 points out that with an election expected within two years, expansion at the relatively isolated Essex airport would affect far fewer voters.

The dispute is the latest in a long line of clashes that began when Mr Blair allegedly broke an agreement with his colleague by announcing his candidature for the leadership of the Labour Party. The comparatively Euro-sceptical Chancellor has also taken issue with Mr Blair's enthusiasm for eurozone membership.

Mr Blair appears well-placed to win the runway argument, partly because the Stansted option is supported by John Prescott, the Deputy Prime Minister, Margaret Beckett, the Environment Secretary, and the Mayor of London, Ken Livingstone - but also because electoral considerations figure strongly.

Mr Blair's camp is also thought to be emphasising that environmental damage from an extra runway at Stansted would be less than building nearer London. Hundreds of thousands of residents near Heathrow already put up with emissions from its two runways, as well as the fumes from traffic on the M4 and M25. Stansted's runway affects far fewer people and the M11 carries less traffic.

Other sources think the Treasury has the upper hand and that the White Paper on the future of air transport due in December - which will reveal the runway decision - will also propose higher taxes on airline passengers. The document is expected to opt for the immediate construction of one runway and safeguard land for a further two runways at other locations.

Alistair Darling, the Secretary State for Transport and an ally of the Chancellor, is yet to declare his hand. But Mr Darling has said that doing nothing is "not an option".

The Government is known to accept the argument that within the next decade the main airports in the South-east will be at full capacity at peak times and that at least one more runway is vital.

Sources close to the decision-making process say ministers might opt for one runway to be built within the next 10 years and a further two over the next 20 to 30 years. If Number 10 gets its way, Heathrow might escape immediate development but it would almost certainly figure in plans for the longer term.