DRIVERLESS cars will be allowed on Britain's motorways next year in a trial set to revolutionise motoring by 2020.

Test drives will begin on a small number of local roads within months before pilots on motorways to assess safety are carried out.

The vehicles could lead to the most "fundamental" change to transport since the invention of the petrol engine, according to Chancellor George Osborne has announced.

Mr Osborne said the move could boost the economy and put the country at the forefront of the new technology.

He 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 next week 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."

Proposals sweeping away regulations that prevent autonomous driving are expected to be brought forward this summer that would allow driverless cars to take to the roads by 2020.

Engineers suggest that driverless cars, which can alert drivers to accidents and traffic jams, could eventually prevent 95 per cent of crashes, according to the Treasury.

Tests will be carried out of "truck platooning" on motorways, which would see lorries travel in a tightly-packed convoy that improves fuel consumption by reducing drag.