Part of BAA's strategy is to replace Heathrow's Terminals 1 and 2, opened in 1955, with a new state of the art terminal.
Work began this week, with the construction of a new pier or satellite building from where passengers will board aircraft.
The second phase, which includes the terminal building and another pier section, will be built on the site of the existing Terminal 2 once it has been demolished
The new terminal should open from 2012, when 70% of all Heathrow passengers will pass through either Terminal 5 or Heathrow East.
Balfour Beatty is contractor for the pier.
Heathrow East will consume £2.5bn of a £4bn total Heathrow budget over the coming five years.