LONDON (REUTERS) - Britain should expand London's Heathrow airport by building a third or even fourth runway, lawmakers said on Friday, weighing into an argument pitting business leaders against environmentalists.

Parliament's Transport Committee rejected a plan championed by London Mayor Boris Johnson to build a new airport in the River Thames estuary to the east of the capital, citing the cost of new transport links and the impact on wildlife.

It also dismissed suggestions that rising demand could be met by connecting existing airports with high-speed rail links.

"We conclude that a third runway at Heathrow is necessary, but also suggest that a four-runway proposal may have merit," the committee said in a statement released on Friday to coincide with the release of its report.

The committee's inquiry was launched last year to consider how to increase London's air transport capacity, which has been stretched to the limit by rising demand while the discussion over the expansion strategy has dragged on.

Prime Minister David Cameron's Conservative-led coalition government bowed to pressure from local residents and protest groups concerned about the environmental impact of a Heathrow expansion when it came to power in 2010 by scrapping plans to build a third runway.

It also ruled out expanding London's smaller airports.

However, a top business lobby group said in March that Britain risked missing out on billions of pounds in trade if it failed to boost direct flights to the world's fastest-growing economies, such as Brazil, China and Russia.

Even lawmakers in Mr Cameron's party, such as Mr Johnson, disagree over the best way to address the issue, but the committee's findings will add to pressure on the government to reconsider expansion of Heathrow, owned by Spanish infrastructure firm Ferrovial.

"We urge the government to respond positively to this report and to actively consider what practical temporary measures could be implemented to secure additional capacity at Heathrow in the short-term," the London Chamber of Commerce and Industry said.

Conservation group WWF criticised the report, saying there was no proven link to economic growth and that Britain has ample capacity to grow without endangering climate change targets.

"This report from the Transport Select Committee is about as predictable and welcome as rain in a British summer," WWF said in a statement.