Business Secretary Vince Cable said a 10 million pound fund will be made available for driverless car researchers in the UK.
Three cities across the UK will be selected to host these computer-controlled car trials from next year, with each test lasting between 18 and 36 months starting in January 2015.
Driverless vehicles are guided by a system of sensors and cameras. They have already been tested in several countries, including the US and Japan, with Sweden set to follow.
"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."
"Driverless cars have huge potential to transform the UK's transport network - they could improve safety, reduce congestion and lower emissions, particularly CO2," said transport minister Claire Perry.
The Department for Transport had originally pledged to let self-driving cars be trialled on public roads by the end of 2013.
UK engineers, including a group at the University of Oxford, have been experimenting with driverless cars. But, concerns about legal and insurance issues have so far restricted the machines to private roads, the BBC reported.
Two types of testing will be reviewed for public roads: fully autonomous cars without a driver, and those with a qualified driver who could take control at any time, similar to laws in the US where driverless cars have been tested on public roads since 2011 in some states.
The review process will conclude in a report submitted to government by the end of 2014, a spokesperson for DfT told the Guardian.
In 2013, Nissan carried out Japan's first public road test of an autonomous vehicle on a highway.
