Building a controversial third runway at Heathrow airport is one of the options short-listed by the Airport Commission in its first report.
The findings of an independent inquiry led by the former head of the Financial Services Authority has also recommended a second runway for Gatwick airport.
However, in a blow to London Mayor Boris Johnson, Mr Davies rejected the idea of building a new airport in the Thames Estuary, plans for which have been dubbed "Boris Island".
To cope with the increasing number of passengers flying into the UK, one of the new runways must be operational by 2030, according to the commission. The second should be up and running by 2050.
The commission has also stopped short of proposing a new runway for Stansted or Birmingham airports, as had been suggested.
Mr Johnson has been bitterly opposed to building a third runway at Heathrow calling the idea of expansion "scandalous".
Last week Mr Johnson threatened to call for a judicial review if plans for a four-runway airport on the Isle of Grain were not included in the commission's report.
The commission said it had not short-listed the Thames Estuary plan "because there are too many uncertainties and challenges surrounding them at this stage".
However, it did suggest undertaking a further study of the options for the new airport in the early part of next year with a view to seeing whether it was a "credible proposal" to be included on the final options for expansion.
Mr Johnson said today: "Howard Davies' recognition of the importance of a hub airport to the economy and his decision to include the option of a new hub in the inner estuary on the Isle of Grain is both sensible and pragmatic, and is welcome news for Londoners and for the future competitive needs of the UK population as a whole."
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