Transport secretary Alistair Darling said that the move - known as the renewable transport fuels obligation - would help Britain in the fight against "the threat of climate change".
"Taking action to tackle climate change is essential," he told the Environmentally Friendly Vehicles Conference in Birmingham.
"The renewable transport fuels obligation I am proposing today is predicted to save around one million tonnes of carbon dioxide emissions in 2010 - the equivalent of taking one million cars off the road," he said.
And Darling made clear his determination to steadily increase carbon savings in order to reduce the impact of transport on climate change, and bring environmental benefits to all.
He said: "I am determined that transport should play its part in addressing the threat of climate change. Making vehicles more efficient and investing in public transport are important aspects of our strategy, but renewable fuels are equally important.
"This obligation is vital in continuing to promote a shift towards cleaner, low carbon road transport."
Most biofuels are derived from oilseed rape and wheat, which are then mixed with petrol and diesel and run in ordinary cars.
But the transport secretary also outlined plans to introduce more advanced biofuels that would make use of waste and possibly even hydrogen fuel, and said that in the longer term the government hoped to expand the range of biofuels available.
He added: "As a next step, we need to have a hard look here in the UK at the practical steps we would need to take to build a hydrogen infrastructure."
The Society of Motor Manufacturers and Traders welcomed Darling's announcement that fuel companies will be obliged to offer more biofuel to motorists.
Chief executive Christopher Macgowan said: "Biofuels are an important part of the drive towards sustainable motoring. However, drivers need to know that a comprehensive network of refuelling sites is available which will support the investment made in alternative-fuelled vehicles. They also need to be confident in the quality of fuel supply and, crucially, these fuels need to be cheaper at the pump to drive demand."