Driverless cars will legally be able to drive on UK roads from January, Business Secretary Vince Cable has announced.

Up to three UK cities, in conjunction with businesses and research organisations, can compete for a share of a £10 million prize fund to host a driverless cars trial lasting 18-36 months.

The Government will also review current road regulations with a view to introducing driverless cars. Among the areas to be looked at will be the need for vehicles to comply with construction and safety regulations, traffic laws and relevant aspects of the Highway Code. It will also look at driverless car regulation in other countries.

Google has been testing its driverless cars, pictured, in and around its Californian HQ and Volvo is to trial 100 driverless cars in Gothenburg, Sweden, starting in 2017. Ford, BMW, Mercedes-Benz, Audi and Tesla are among the other manufacturers looking at driverless car technology.

“Today’s announcement will see driverless cars take to our streets in less than six months, putting us at the forefront of this transformational technology and opening up new opportunities for our economy and society,” Mr Cable said in a statement.

Transport Minister Claire Perry said: “Driverless cars have huge potential to transform the UK’s transport network – they could improve safety, reduce congestion and lower emissions, particularly CO2.”

The driverless cars competition is being funded by the Department for Business, Innovation and Skills and the Department for Transport, in partnership with the UK’s innovation agency, the Technology Strategy Board (TSB).

Successful projects must be business-led and need to demonstrate close collaboration with partners such as technology developers, supply chain companies and manufacturers.

Applicants must first register with the TSB by phoning 0300 321 4357 or visiting www.innovateuk.org.