Business Secretary Vince Cable said driverless cars have the potential to "cut congestion and pollution and improve road safety."
Carmakers are pouring money into self-driving vehicles that boast safety and efficiency features.
The Mercedes-Benz that nearly drives itself
Japanese giant Nissan (NSANF) said automated cars could be rolling off its production lines by 2020. General Motors(GM), Toyota(TM) and Germany's Audi, part of Volkswagen(VLKAY), are also working on driverless vehicles.
Google(GOOG) too, wants a slice of the action. The internet giant has been developing the technology and testing its self-drive cars on public roads for years.