Robotic cars designed never to crash or exceed the speed limit could be tested on the streets of Leicester.
The driverless vehicles may be seen on the city's roads as early as January next year as part of Government-backed trials.
Ministers want the UK to be at the forefront of the new technology, which some experts believe could be commonplace within a decade.
They are looking to select up to three cities where the vehicles can be tested in a normal urban setting.
Leicester City Council is considering bidding to become one of the cities.
Business Secretary Vince Cable announced the trials at the motor vehicle research specialists Mira, of Higham-on-the-Hill, near Hinckley on Wednesday.
Dr Cable was given a demonstration of a Ford Mondeo which had been converted into a driverless car on one of its test tracks.
Chris Reeves, an expert on driverless cars at Mira, predicted robotic cars could become a regular feature on the roads within 10 years.
"If we can get these vehicles to coordinate with each other and with traffic lights we can see real safety benefits and efficiency improvements," he said. "Potentially, the technology could stop speeding.
"To have a driverless car which you could go and purchase and use on the public highway, I would forecast that will be a decade away."
Mr Reeves said Mira had been developing driverless technology for the past 10 years. He said such technology was already being used on passenger vehicles at Heathrow Airport.
The trials are expected to last between 18 and 36 months and start in January 2015.
Ministers have also launched a review of current road regulations to see how they could be adapted to accommodate the technology.
They want to research two areas of driverless technology: cars with a qualified driver who can take over control of the driverless car and fully autonomous vehicles where there is no driver.
Dr Cable said: "This 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.
"Through the Government's industrial strategy we are backing the automotive sector as it goes from strength to strength. We are providing the right environment to give businesses the confidence to invest and create high skilled jobs."
A city council spokeswoman said: "We have not yet made a decision about whether to make a bid for this, but we will be looking into it in due course."
