The project, which will see the existing runway deepened and widened by about 7 metres on each side, will allow wide-bodied aircraft such as the Boeing 787 and Airbus A330 to access the airport.

It is expected to create 4500 jobs and generate an estimated $12.7 billion in economic benefits through international airfreight, industrial expansion and stimulation of the visitor economy over 20 years.

In addition to twice daily international passenger flights, the upgrade will also unlock potentially billions of dollars of export opportunities for businesses in the northern part of NSW.

"Having wide-bodied aircraft come in and out of this region will change the lives of the people of the Hunter for the better," Newcastle Airport chief executive Peter Cock said on Friday.

"This has given us a chance to dream, to have a vision."

Work is due to commence in August and take about two years to complete.

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Government to invest $66million into upgrading Newcastle Airport's runway to international standard

Prime Minister Scott Morrison, who confirmed on Friday that $66 million would be set aside for the project in Tuesday's budget, said the project would allow the Hunter to realise its potential

"What is exciting about this project is that our (the government's) commitment to it backs in what I know is the great level of confidence about where the Hunter is going. This is part of our plan to support the Hunter Region to realise its potential. We are seeing jobs here in the Hunter, this will add more jobs in the Hunter and this will be the back-up that is needed for the commercial side of the industry and region to really realise it's potential."

Federal Lyne MP Dr David Gillespie said the runway upgrade would open up new international markets for tourism and trade and boost the region's economy.

"Our tourism operators know what an amazing asset the airport is and, as we reopen flights within Australia and later to the world, the Hunter and Mid North Coast are all set to benefit," he said.

'This project will reduce cost and travel times for air-freight movements benefitting our primary producers and attract more corporate, defence and aerospace to the Hunter."

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Paterson MP Meryl Swanson, whose electorate takes in Newcastle Airport, said the runway upgrade would be a game-changer for the Hunter's economy.

"Not only will this project have wide-reaching impacts across our region's economy, it will guarantee the future of multiple sectors and allow Williamtown to become a Defence powerhouse," Ms Swanson said.

"I want to thank the Newcastle Airport, its board and staff, the Hunter Joint Organisation of Councils, Business Hunter, the Committee for the Hunter and the community for uniting with me to ensure this win for the Hunter.

"The Coalition Government took some convincing but I am pleased they have listened to the community."

Newcastle lord mayor Nuatali Nelmes said the government's decision to fund the upgrade was "recognition of Newcastle's rapidly expanding national importance".

Chair of the Hunter Joint Organisation and Cessnock mayor Bob Pynsent said the upgrade would be an encouraging boost to the Hunter's existing and future industries at a time when they need it most.

"I'm excited to see the project come to fruition almost three years after the Hunter JO sought Federal Government support for this project in Canberra," he said.

"I am also grateful for the leadership and initiative shown by my fellow mayors from and since that first delegation in supporting the airport's plan."

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