* Lawmakers to debate then vote on policy within 21 days
* Heathrow could still face legal challenges
* Airport must apply for planning permission
* Construction could start in 2021 (Adds reaction, detail)
By Sarah Young
LONDON, June 5 (Reuters) - British ministers backed plans for a new runway at London's Heathrow airport on Tuesday, opening the way for a parliamentary vote after decades of delays, although the project could still face challenges before building starts.
Heathrow is Europe's busiest airport but is now operating at full capacity. In the past, plans to expand the airport have faced opposition from local communities and environmentalists but the current 14 billion pound ($18.5 billion) expansion plan is making progress.
The cabinet gave its blessing to the new runway plan on Tuesday, said transport minister Chris Grayling, and lawmakers should now vote on the issue within 21 days.
The decision comes after almost half a century of indecision on how and where to add new airport capacity in densely populated southeast England. If it goes ahead it will be the first full-length runway built in the London area for 70 years.
"Expansion at Heathrow presents a unique opportunity to deliver a multi-billion pound boost to our economy, strengthen our global links and maintain our position as a world leader in aviation," Grayling said in a statement.
In an attempt to satisfy opponents of the scheme, he said that the new runway would be delivered within existing air quality obligations, and include a 6.5-hour scheduled night flight ban, plus compensation for local residents and a new independent body would be set up to monitor aviation noise.
The expansion plan could face legal challenges in future, however, with four local councils and environmental group Greenpeace amongst those who could seek a judicial review of the project.
Heathrow, owned by Ferrovial, Qatar Investment Authority and China Investment Corporation among others, still has to secure planning permission, with construction slated to start in 2021 and the new runway operational by 2026.
An independent commission recommended Heathrow as the site for a new runway in 2015, saying that adding capacity there would bring the country the greatest economic benefits and government has based its policy on these findings.
Business leaders and politicians have argued that a bigger Heathrow is even more important since Britain voted to leave the EU in 2016, as the expanded airport will enhance trade links and provide a boost to economic growth.
Despite the opposition of some politicians within the ruling Conservative party, including foreign minister Boris Johnson, lawmakers are expected to vote in favour of the plan, according to polling by ComRes last month.
A third runway would help Britain catch up with European rivals. Paris and Frankfurt have four runways while Amsterdam has six.
British employers group, the Confederation of British Industry, called Grayling's announcement "fantastic".
"Expanding our aviation capacity, and creating new flight routes to rapidly growing markets, is mission critical to ensuring Britain can compete on the post-Brexit world stage," CBI deputy director-general Josh Hardie said.
For their part, airlines are keen for the new runway to be built but have cautioned over its cost as they don't want airport charges to rise to pay for it as this would mean they will have to increase ticket prices.
The 14 billion pound cost of the project will be privately financed and Grayling said on Tuesday that airport charges would be kept close to current levels.
Reacting to the expansion news, Heathrow's biggest airline, British Airways-owner IAG said: "We will be looking to the regulator to protect customers and keep charges flat in real terms." (Editing by Stephen Addison and Richard Balmforth)