"Driverless vehicle technology has the potential to be a real game-change on the UK's roads, altering the face of motoring in the most fundamental of ways and delivering major benefits for road safety, social inclusion, emissions and congestion," said UK transport minister Claire Perry.
The UK government is also considering changes to the country's Highway Code for these cars to be allowed on the roads for public use as it wants Britain to become a world leader in driverless technology.
Business secretary Vince Cable said the trials, backed by 19 million pounds worth of funding from the government, would keep the UK at the cutting edge of automotive technology and should bring more highly-skilled jobs to the UK.
"The projects we are now funding in Greenwich, Bristol, Milton Keynes and Coventry will help to ensure we are world-leaders in this field and able to benefit from what is expected to be a 900 billion pounds industry by 2025," he said.
The scheme involves carrying out tests of automated passenger shuttle vehicles as well as autonomous valet parking for adapted cars.
The Lutz Pathfinder is a two-seater, electric-powered vehicle that is packed with 19 sensors, cameras, radar and Lidar a remote sensing technology that measures distance by illuminating a target with a laser and analysing the reflected light.
Three pods will drive themselves on the pavements and pedestrianised areas and, if successful, a fleet of 40 vehicles will be eventually rolled out.
Alongside the trials in Milton Keynes and Coventry, Bristol will host the Venturer consortium, which aims to investigate whether driverless cars can reduce congestion and make roads safer.
A Department of Transport report acknowledged that true driverless cars may be some way off and that current tests of the technology will need to include a qualified test driver to supervise the vehicle.
The UK Autodrive programme involves firms like Tata Motors owned Jaguar Land Rover and Ford.
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