Direct flights from Perth to London will be introduced in 2018, marking the first time Australians will be able to fly direct to Europe.

Key points: Flights will operate from Perth Airport's domestic terminal

Flights will operate from Perth Airport's domestic terminal State Government will contribute $14m for works at airport

State Government will contribute $14m for works at airport Qantas boss Alan Joyce says route will create hundreds of jobs

Announcing the new non-stop service, Qantas chief executive Alan Joyce said the 17-hour flights would be the third-longest passenger flights in the world.

Mr Joyce said the airline's new 787 Dreamliner aircraft would be used on the route, which would operate from the domestic terminal at Perth Airport from March 2018.

The announcement came after the WA Government ended an impasse with Qantas and agreed to help fund an upgrade of the terminal.

Premier Colin Barnett said the state would contribute $14 million for capital works at the airport, to be used for the construction of quarantine and Australian Border Force infrastructure.

Qantas wanted the non-stop service to operate out of a domestic terminal, rather than the new international terminal, to make it easier for passengers with connecting flights.

Mr Joyce said the new route was "amazing news" for Perth and Australia and was a "watershed for travel, tourism and trade".

"This is a ground-breaking aircraft, on a ground-breaking route for Qantas," he said.

"Our customers, from Perth, are going to have a service that saves you three hours getting to London and from the UK getting here."

"From Melbourne and Sydney and all other destinations in Australia, it will save you an hour going through Perth compared to Dubai or Singapore or other destinations."

Longest long-haul flights Auckland—Dubai: 17 hours, 25 minutes

17 hours, 25 minutes Perth to London: 17 hours

17 hours Dallas/Fort Worth—Sydney: 16 hours, 55 minutes

16 hours, 55 minutes Johannesburg—Atlanta: 16 hours, 50 minutes

16 hours, 50 minutes San Francisco—Singapore: 16 hours, 30 minutes

16 hours, 30 minutes Abu Dhabi—Los Angeles: 16 hours, 30 minutes

Mr Joyce said the aircraft was specially built for the long journey.

"This is great for Western Australia. It's going to create hundreds of jobs," he said.

"This has potential to be a bigger haul, with operations potentially into Paris, into Frankfurt, into southern Europe and build a true hub here for Australians to travel to Europe and Europeans to travel into Australia.

"Australians have never had a direct link to Europe before, so the opportunities this opens up are huge."

Game changer

Perth Airport chief executive Kevin Brown welcomed the announcement, which comes after uncertainty whether the route would go ahead after negotiations on terminal arrangements stalled.

"Yes, it's been a long negotiation, but they have been very fruitful," he said.

"We are in a win-win situation, and I look forward to developing those relationships even further going ahead."

The 17-hour flights will be the third-longest passenger flights in the world, Qantas says. ( ABC News: Rebecca Carmody )

Mr Barnett described the deal as "game-changing" and said the local economy could potentially benefit to the tune of more than $36 million per year.

"It is a very significant change and development for tourism ... it very much makes Perth an international destination for air travellers," he said.

"It elevates Perth to one of the major sites around the world, where you will get major flows of international tourists.

"The tourism benefits to the state are enormous. The service will create opportunities for people to stop over in Perth for a day or two if en route to or from another Australian destination."

He said new jobs would be created both at Qantas and at business providing support to Qantas, and it was hoped direct routes to other European cities would also be created eventually.