Australia's Federal Infrastructure Minister says Sydney Airport will not be able to handle its expected surge in traffic by 2029, and a second airport is needed.

Anthony Albanese has formally approved the Sydney Airport Corporation's draft expansion plans for the next 20 years.

But the minister has invited the New South Wales Government to take part in a study to identify potential new airport sites.

The Sydney Airport Corporation has forecast passenger traffic to more-than-double over the next two decades.