The British Infrastructure Group (BIG) report says a lack of runway capacity at Heathrow is causing "substantial damage to the industry as a whole".
Both Heathrow and Gatwick are bidding for an extra runway to be built.
A Department for Transport spokesman said it was important to consider all the evidence before making a decision.
Last month, the then transport secretary Patrick McLoughlin said a decision on expansion had been put back until "at least October" following the result of the EU referendum.
However, BIG - a Commons group led by the Conservative MP Grant Shapps - says a decision should be made immediately, adding that it would show new Prime Minister Theresa May's "mettle".
It says it has gathered evidence from local and national authorities as well as academics about future airport capacity.
The report's recommendations state: "The problem of capacity at the current hub, Heathrow, is causing substantial damage to the industry as a whole.
"It erodes confidence in the government's stated ambition of growing the economy and our international trade."
Last July, the independent Airport Commission recommended Heathrow be expanded with a third runway - a 3,500m strip north of the two existing ones - at an estimated cost of Â£18.6bn.
But in December the government delayed its decision, saying further work on noise, pollution and compensation needed to be carried out.
Then, last month, Gatwick said the UK's Brexit vote showed it was "clearer than ever that only Gatwick can deliver the new runway Britain needs".
The group of MPs also called for the expansion of regional airports "for the good of UK plc".
"Only their expansion can address the coming 'capacity crunch' and deliver sustained growth, underlining the concepts of the Northern Powerhouse and the Midlands Engine and sharing the proceeds of growth across Britain," the report says.
BIG also calls for infrastructure at regional airports to be "joined up" and for airport passenger duty to be made "progressively lower".

Speaking in advance of their trips, they proposed very different solutions.
Deputy First Minister Martin McGuinness said he would be asking US officials to help convince the UK government to take a new approach to welfare funding.
But Secretary of State Theresa Villiers will say those blocking welfare reform are putting more strain on the budget.
Mr McGuinness travelled to Washington on Monday while Ms Villiers will begin a three-day visit to the US on Tuesday.
She will update members of the US administration, members of Congress and senior figures in the Irish American community on the current political situation in Northern Ireland.
She said her message during the trip to Washington and New York is that the Stormont House Agreement remains the best hope for building a brighter more secure future.
The agreement, signed by Northern Ireland's five main political parties last December, was a wide-ranging deal that addressed some of Stormont's current financial difficulties, after a reduction in its block grant from Westminster.
However, Mr McGuinness' Sinn FÃ©in party withdrew its support for the bill in March because of a row over the implementation of welfare reforms.
The Sinn FÃ©in MLA is due to meet influential Irish Americans, representatives of the US State Department representatives and other senior US officials.
Speaking on Sunday evening, he said Northern Ireland's political institutions were in an "extremely grave situation".
"The institutions of the Good Friday Agreement, which have underpinned the Irish peace process for almost two decades, are facing crisis," Mr McGuinness said.
He repeated his call for the UK government to change its approach and ensure the institutions are "politically and economically viable and able to meet the needs of a society emerging from a long and bitter conflict".
"It is my hope that the US administration - which has been a key ally since the inception of the peace process - can help convince the British government of the gravity of the current situation and to end their current approach which threatens to undermine the incredible progress we have made," Mr McGuinness added.
The government must make an "urgent and immediate decision" on airport expansion in south-east England, a group of cross-party MPs have said.
[NEXT_CONCEPT]
Northern Ireland's secretary of state and deputy first minister are taking separate visits to the US to brief the government about the Stormont crisis.