Speaking to the Commons, Mr Osborne said: “At a time of great uncertainty in the global economy, Britain must take bold decisions now to ensure it leads the world when it comes to new technologies and infrastructure. That’s what my Budget will seek to do.

“Driverless cars could represent the most fundamental change to transport since the invention of the internal combustion engine. Naturally we need to ensure safety, and that’s what the trials we are introducing will test.

“If successful, we could see driverless cars available for sale and on Britain’s roads, boosting UK jobs and productivity.”

Driverless car plans will include test drives on roads in Bristol, Coventry and Milton Keynes and Greenwich, and the Government is also backing plans for a “connected corridor” between London to Dover, which would allow vehicles travelling along it to communicate wirelessly with infrastructure and other vehicles.

In response, RAC chief engineer David Bizley said: “The RAC recognises that driverless cars have the potential to offer great benefits in terms of improved safety on our roads and the prospect of greater mobility for the disabled and the elderly. They also present an opportunity for the UK to consolidate its standing as a centre of excellence for automotive technology and vehicle manufacture.

“Trials such as those proposed will be essential in proving the capability and reliability of autonomous vehicle technology. Inevitably, however, motorists will be apprehensive about the idea of sharing road space with driverless vehicles; for this reason it will be essential to keep other road users well informed about these trials so they are not surprised or distracted by the presence of a driverless car.”