David Willetts, minister for universities and science, has revealed that he has persuaded the UK Department for Transport to relax regulations to allow an Oxford University team to test its self-drive vehicle on public roads.
The move is expected to pave the way for such cars to hit the roads within 20 years.
"In California they have a regulatory regime in place that permits these cars to operate on public roads. The Department of Transport is now going to introduce a regulatory regime that makes that possible here," Willetts told the 'Sunday Times'.
The RobotCar project based at Oxford University uses a modified electric Nissan Leaf fitted with a combination of cameras and high-tech laser sensors.
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Via an onboard computer, these help to control everything from steering to direction-indicating.
"Driverless cars will happen, they are an inevitability; much of the technology is already in existing vehicles," said Malcolm McCulloch at the RobotCar base - Oxford University's department of engineering science.
"The next stage is where the car drives a route it has navigated before under various conditions, and has learnt; that could be deployed within five years.
The Department of Transport, however, said that no final decision has yet been made on allowing driverless cars on public roads.