The British government was on the back foot Friday after being branded "gutless" for further delaying a decision on where to build a much-needed new runway for London.

The government said Thursday it would postpone the decision until at least mid-2016 to assess the environmental impact of possible expansion at London Heathrow, Europe's busiest airport.

Businesses have been lobbying for a third runway at Heathrow, a move fiercely opposed by environmental groups and lawmakers in residential west London.

Prime Minister David Cameron had promised a decision before the New Year.

Transport Secretary Patrick McLoughlin on Friday refused to rule out yet more delay on choosing between a third runway at Heathrow, extending one of the current runways or building a second one at the secondary London Gatwick Airport.

The government had made "some important moves" forward by accepting the case for expanding airport capacity in southeast England, he told BBC radio.

"We accept that additional airport capacity is needed and we will make a decision on that hopefully in the summer of next year", which would "still allow us to get the extra capacity we need by 2030".

McLoughlin insisted that all options were "still on the table".

"Please get off the fixation of a third runway" at Heathrow, he said.

An earlier commission had recommended expanding Heathrow, but hundreds of homes would have to be demolished and the extra traffic could mean Britain fails to meet emissions targets.

Business groups have long called for Heathrow's extension, which they say would boost trade and help Britain keep up with rapidly expanding airports in the Middle East and Asia.

Heathrow handled some 73.4 million passengers in 2014 and connects to 185 destinations in 84 countries.

It lost its crown as the world's busiest airport for international passenger traffic to Dubai last year, while Turkey is planning massive airport capacity expansion in Istanbul.

- 'Gutless move' -

"Businesses will see this as a gutless move by a government that promised a clear decision on a new runway by the end of the year," said John Longworth, director-general at the British Chambers of Commerce umbrella organisation.

"Ministers need to stop prevaricating and get on with doing what the country sorely needs."

Critics also said the decision to delay was to avoid political embarrassment for Cameron and his Conservative Party.

When in opposition in 2009, Cameron opposed adding a third runway to Heathrow.

More importantly, Zac Goldsmith, the Conservative candidate for the May 2016 London mayoral elections, threatened to resign his seat in parliament should Heathrow expansion get the green light.

Goldsmith represents a constituency near Heathrow and his resignation would trigger a by-election to replace him.

"I am absolutely delighted that, after much campaigning, the government has heard the arguments, seen sense and will judge the options against an environmental test," Goldsmith said.

He has in the past said he would not quit if the prime minister announced a "legitimate delaying exercise".

Environmental campaigners have set up camp in the countryside around Heathrow, and have stacked piles of wood to use for barricades.

Simon Clydesdale, aviation campaigner for Greenpeace, said there was no way the transport hub could be extended without breaking pollution limits.

"It's about time everyone accepted that no lobbying budget is big enough to change the laws of physics," he said.

Conservative London Mayor Boris Johnson, who has advocated building a completely new airport in the Thames Estuary, said the difficulties of expanding Heathrow were becoming "very, very obvious".

"The real problem is it's so short term. It's so pathetically unambitious for a country like Britain."