Contractors working on the Environment Agency's flood defence scheme near the airport dug up the device at around 9am this morning during the excavation of a World War Two hut base.
The device appeared to be an unexploded ordnance and a 50 metre cordon, later extended to 100 metres, was set up around the object as police and firefighters were called to the scene.
A Shoreham Airport spokesman confirmed it had decided to cease all flying until being given the all clear by the bomb disposal team.
Police said: “Although some 700 metres away from the runway, the suspected bomb is within 100 metres of the airport perimeter road and so the airport has been shut and flights suspended as a precaution.
The Environment Agency said: “We have assessed the risk to the public as low as the fire brigade and police are on site, and the airport has been closed along with their access road, Cecil Pashley Way.”
A military Explosive Ordnance Disposal team from Aldershot were called to identify the object.
Police confirmed it was identified as a non-explosive dummy round used for training purposes.
It removed by the bomb disposal team at 12.20pm.
The Environment Agency spokesman said: "The round discovered was a practice round fired by a tank and they have identified it`s manufacturing period as between 1982 and 1992, which suggests it had been dumped on site rather than being of World War Two origin."
The safety cordon has since been removed, police said.