The Turnbull government says it is prepared to develop Sydney's second airport itself if the Sydney Airport Group does not take on the project by mid-May.
Sydney Airport, the operator of Sydney's main Kingsford Smith airport, said earlier this month that it wants nine months to consider whether it will develop the second airport at Badgerys Creek instead of the four months allocated by the federal government.
Sydney Airport holds a right of first refusal.
Urban Infrastructure Minister Paul Fletcher said on Wednesday that the group had four months to accept a notice of intention.
"If Sydney Airport Group accepts, it will build and operate Western Sydney Airport," Mr Fletcher said in a statement.
"If not, the government is prepared to do it ourselves."
Mr Fletcher said the government was also able to go to another private company.
"We have no intention of letting this drag out," he said.
The government gave the green light for construction of the long-awaited airport earlier this month, signing off on a plan for an 1800 hectare site that is expected to open in the mid-2020s.
Opposition infrastructure spokesman Anthony Albanese said four months was enough time for Sydney Airport to decide whether to take on the project.
"That is enough time for Sydney Airport to make a decision and it is prudent for the government to put in place mechanisms to not delay," he said on Wednesday.
The government has previously said that while the airport plan will have land set aside for a train station and a train line route, it does not actually include a rail link.
There are however plans for road transport, including the new M12 motorway, which will connect the M7 to the airport.
However Mr Albanese said there should be a rail line to the airport "from day one", as well as a plan to pipe aviation fuel there, and a local employment plan to ensure jobs for western Sydney residents.
"This needs to be...a catalyst, not just a runway and a terminal, but a catalyst for economic growth and jobs in western Sydney," he said.
