Fully self-driving vehicles could be on UK roads by 2025 under new government plans backed by a £100m investment.
New laws are planned to speed up the rollout, with £34m of safety research to feed into developing the legislation.
Vehicles that can drive themselves only on motorways could even be on sale within the next year, the government said, but people would still need a licence to use them on different types of roads.
Others that are completely autonomous, and could be used for deliveries for example, wouldn't need a licence and could be up and running in three years' time if the government's vision is realised.
Cars with self-driving capabilities, such as Teslas, are already fairly common in some British cities, and companies such as Google are already testing autonomous vehicles on public roads in the US.
The technology relies on multiple cameras and range-detecting lasers to navigate and spot vehicles, pedestrians and other obstacles.
Supporters say it can make roads safer and cut driver error, but the testing and rules and regulations around the technology are still being worked out.
The government is consulting on safety and said new laws would make manufacturers responsible for a vehicle's actions when self-driving is completely in control, meaning a human driver would not be liable for accidents.
The industry could create as many as 38,000 jobs and revolutionise public transport, according to the Department for Transport.
Transport Secretary Grant Shapps said the technology can "improve people's access to education and other vital services" and "make our roads safer by reducing the dangers of driver error in road collisions".
"We want the UK to be at the forefront of developing and using this fantastic technology, and that is why we are investing millions in vital research into safety and setting the legislation to ensure we gain the full benefits that this technology promises," he added.
AA president Edmund King said the government was right to put in extra funding and research into self-driving technology and the accompanying laws.
"Assisted driving systems, for example, autonomous emergency braking and adaptive cruise control are already helping millions of drivers stay safe on the roads," he said.
"It is still quite a big leap from assisted driving, where the driver is still in control, to self-driving, where the car takes control.
"It is important that the government does study how these vehicles would interact with other road users on different roads and changing weather conditions.
"However, the ultimate prize, in terms of saving thousands of lives and improving the mobility of the elderly and the less mobile, is well worth pursuing."