The Department for Transport figures are 8% lower than 2003, when the number of highway deaths rose slightly compared to the previous year.
It comes four years after the Government set a target to cut the 1994-1998 road deaths average by 40%.
Road safety minister Stephen Ladyman said the figures were encouraging, but nearly nine people a day still died on roads last year, which was "too high".
"Britain has one of the best road safety records in the world and the Government is committed to improving it further," he said.
By 2010, the Government also hopes to cut the number of child deaths by 50% of the 1994 to 1998 average figure and reduce the slight casualty rate by 10%.
In 2004, the number of children killed or seriously injured was 43% below this figure, and provisional estimates suggest the casualty rate was 20% below the average.
Road safety charity Brake welcomed the DfT figures, but voiced fears over a "shocking" 18% rise in cyclist deaths.
It blamed a "woeful lack of cycle paths and other facilities for cyclists".