RAF Northolt, the Air Forces’ oldest operational base, could be sold for hundreds of millions of pounds to property developers keen to build on a prime piece of north London land.
High-level talks in Whitehall are also believed to have discussed using the site as a satellite airfield for Heathrow, located about four miles away.
The future of Northolt, which occupies hundreds of acres in Hillingdon, near the M25, is part of a wider review of the defence estate as the MoD battles swingeing budget cuts.
Industry sources suggested discussions had occurred to include the base – where the body of Diana, Princess of Wales, was repatriated from France after her death in 1997 – in an forthcoming consultation about the future of British air travel.
Air Commodore Andrew Lambert, a former Defence chief, said that it would be a “great shame to lose RAF Northolt”.
“I am sure that the site would make lots of money because it is … a prime bit of real estate,” he told The Guardian. “But I'd want to know if the MoD has done its sums properly.”
The loss of one of the armed forces' most cherished bases, established in 1915, three years before the RAF was formed, would be a huge blow to the military.
During the Second World War the base was a home to British Hurricane and Spitfire squadrons that defended London during the Battle of Britain and is the home of the 32 (Royal) Squadron.
RAF Typhoon fighters, recently deployed in Libya, will be based there during the forthcoming London Olympics.
The Queen takes most of her flights from Northolt while the US President’s Air Force One also uses the base during visits to Britain.
Ministry of Defence officials admitted that “all the options were on the table” but suggested a sale of the base, once Britain’s busiest civilian airport, was unlikely.
An MoD spokesman said: “We continue to scrutinise all defence expenditure to secure the best value for money. RAF Northolt is no exception.
“It already generates revenue through landing fees from private flights and sources of income generation are of course kept under review.”
MoD sources downplayed the Heathrow plans, saying it was “extremely unlikely” despite its proximity to the capital’s main airport.
The Armed Forces redundancy programme is expected to deliver up to 11,000 compulsory job cuts across the three Services, with the loss of 30,000 posts. The MoD is also facing £2 billion of budget cuts over the next 12 months.
A Department for Transport (DfT) spokesman added: "As the chancellor made clear in his autumn statement, we will explore all the options for maintaining the UK's aviation hub status with the exception of a third runway at Heathrow.
“The government will consult on an overarching sustainable framework for UK aviation this spring."
BAA, which owns six British airports including Heathrow, said "all options should be put on the table" when the review starts.