In an effort to appease critics he said airlines using the new runway would be required to use the newest, least-polluting aircraft.
He told MPs the government was satisfied environmental targets could be met, as it would put an initial cap on additional flights from the new runway of 125,000 a year, would ensure new slots were "green slots" used by only the "cleanest planes" and would set a new target on aircraft emissions - that they would be lower in 2050 than in 2005.
"Taken together this gives us the toughest climate change regime for aviation of any country in the world," he told MPs.
He also announced he would set up a company to look into creating a high-speed rail line between London and Scotland - adding there was a "strong case" for a new high speed rail hub at Heathrow.
A feasibility study carried out in 2007 concluded that this could cost up to £30bn.
Mr Hoon also announced plans to spend up to £6bn increasing motorway capacity across the country, through widening and allowing drivers to use the hard shoulder at busy times.
But he ruled out bringing in "mixed mode" use of runways - ending the current system where planes land on one runway until 3pm then the other for the rest of the day to give residents a break from noise.
However, he said the Cranford agreement, which limits planes taking off to the east of the airport, would end, which he said would benefit Windsor to the west of the airport and Hatton and North Feltham to the east.
He told MPs Heathrow was "our most important international gateway".
"It connects us with the growth markets of the future - essential for every great trading nation," he told MPs.
"But for too long it has operated at full capacity, losing ground to international hub airports in other countries and with relatively minor problems causing severe delays to passengers."
He said the construction of the new runway alone would create up to 60,000 jobs and would ensure "Britain remains a place where the world can come to do business".
The debate was halted when John McDonnell, whose constituency includes Heathrow, shouted "disgrace" as the transport secretary said MPs would not get a vote on the decision.
After marching from the backbenches to the despatch box he picked up the ceremonial mace and placed it on an MPs' bench - he refused requests to end his protest, was ordered out of the Commons and suspended for a week.
The government has long argued, in principle, that it is in favour of the scheme, subject to pollution limits and access concerns.
But there has been deep unease within Labour ranks, with several cabinet members reported to be unconvinced and more than 50 Labour MPs openly opposed.
At a press conference in Berlin ahead of the Commons statement, Prime Minister Gordon Brown said he wanted to "protect the economic future of the country while, at the same time, meeting the very tough environmental conditions we have set ourselves".
It is at risk and if it continues to decline, then the consequences for west London and the Thames Valley will be very, very serious indeed
Shadow transport secretary Theresa Villiers told BBC Radio 4's Today any government environmental promises would be shown "to not be worth the paper they are written on" and said her party would cancel the project if they win the next general election.
In the Commons she said: "This is a bleak day for our environment and for all those of us who care about safeguarding it."
The Liberal Democrats also oppose the third runway and have urged ministers to invest in high-speed rail links instead.
Their spokeswoman, Susan Kramer, told the BBC the arguments in favour of expansion were "glib" and south west London would become a "pretty miserable" place to live.
"There's this conventional wisdom amongst business that you must grow the airport ... it just isn't held up by the reality. Actually Heathrow has been serving fewer destinations over the last ten years."
The statement to MPs marks the start of the planning process which would be a lengthy one, even without the opposition and legal challenges expected.
Work on a new runway is unlikely to start until 2015 and it is not expected to be operational for at least a decade.
About 700 homes will have to be demolished to make way for the runway, which will increase the number of flights using Heathrow from about 480,000 a year now to 702,000 by 2030.
Environmental campaigners say the decision leaves the government's legal commitment to cut carbon emissions by 80% by 2050 in tatters.
Energy Secretary Ed Miliband told the BBC the plans represented "constrained expansion" with strict rules on air quality and noise.
But Greenpeace director John Sauven said: "If Gordon Brown thinks this is a green runway then he must be colour-blind.
"This package is designed to patch up a cabinet split and will do very little to reduce the huge environmental impact of an expanded Heathrow, which will now become the single biggest emitter of carbon-dioxide in the country."
Barbara Reid, spokeswoman for an all-party group of local authorities, said they were discussing mounting a legal challenge against the government.
"We are talking to our lawyers," she added.
Supporters of the runway say the UK economy will lose business to the rest of Europe if it does not go ahead, pointing out that rival airports such as Paris and Amsterdam already have at least four runways.
Former Labour MP Lord Soley, campaign director of Future Heathrow, which represents groups in favour of expanding the airport, said Heathrow brought jobs and "prosperity" to west London and the Thames Valley that was "at risk".
The boss of British Airways, Willie Walsh, said he was "very pleased" by the decision and welcomed the fact the scheme would be subject to "very strict environmental conditions".
Richard Lambert, director-general of the Confederation of British Industry, said: "This approach to expanding Heathrow's capacity makes real sense. It will create the integrated transport system necessary for an economy that needs to grow in an environmentally sustainable fashion."
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