Flights from Dundee to London City Airport could start as early as next spring.
Flights between the two cities would continue with the Loganair service, which sees 11 flights a week take off between Dundee and London Stansted.
The link is supported by Public Service Obligation which protects routes which boost tourism, connect the UK and encourage economic growth.
News of the extension comes shorlty after bosses at London City Airport had launched an ambitious bid to secure a direct route between the two airports.
Despite news of the continued Stansted link, it is understood flights from Dundee to London City will start as soon as spring next year, with an announcement on the switch expected by December.
Sources close to the deal say the number of flights per day between the two cities is set to remain the same and will continue to be operated by Loganair, which will increase the size of aircraft on the route from a 33-seater aircraft to a 48-seater in May.
Dundee West MP Chris Law welcomed news that flights from the City of Discovery to the UK capital are set to continue.
The MP, who publicly backed the London City route in the summer, said: “There are huge benefits to Dundee from a dedicated air link to London, and with Dundee’s increasing national and global reputation as a great place to live, work and visit, our city can look forward to welcoming more people than ever before.”
UK Aviation Minister Paul Maynard added: “This decision supports jobs and allows businesses to access global markets – as well as connecting friends and family.”
