Trials of driverless cars are currently being worked on in Bristol, Coventry, Milton Keynes and Greenwich, London.
Eight new projects in the UK have been given £20m to research and develop driverless car technology.
The money will be used to help improve the communications systems between vehicles and the urban environment - including "talking car technologies".
The schemes range from developing autonomous shuttles to carry visually-impaired passengers using advanced sensors, to simulation trials for autonomous pods.
Trials of driverless cars are currently being worked on in Bristol, Coventry, Milton Keynes and Greenwich, London.
The first driverless cars on the streets of London will resemble the electric passenger shuttles used at Heathrow Airport.
The autonomous vehicle industry is estimated to be worth £900 billion per year globally by 2025.
Business Secretary Sajid Javid said: "Our cars of the future will be equipped with the technologies that will make getting from A to B safer, faster, and cleaner.
"They will alert drivers of accidents ahead and be able to receive information from their surroundings about hazards, increasing the safety of drivers, passengers and pedestrians."
Transport Secretary Patrick McLoughlin said: "These projects will help profoundly change the way we travel within years, transforming our roads by making travel a simpler experience for drivers, reducing accidents and helping traffic flow more smoothly.
"They will also bring great benefits to our society and the wider economy by opening up new routes for global investment."
