The Government is to invest £500 million in a drive to get more travellers using electric cars.
The cash boost will include an extension of the Government scheme to provide grants of up to £5,000 towards the cost of an electric vehicle.
Announced by Deputy Prime Minister Nick Clegg, the investment covers the period 2015 to 2020 and is intended to boost the ultra-low emission vehicle (ULEV) industry.
The initiative will:
:: Create "ultra-low city status" - local areas coming up with the most ambitious plans can win a share of £35 million to make the leap to becoming ultra-low.
Winning cities could, for example, incentivise drivers of green cars by letting them use bus lanes or allowing them to park for free. Additional funding of £50 million will also be available for local areas to invest in cleaner taxis and buses.
:: Create jobs and innovate - the Government will invest £100 million in research and development in ULEV to cement the UK's position as a leader in the development of these technologies. This investment will help create skilled British jobs and have a further positive impact down the supply chain.
:: Save consumers money - the £5,000 ULEV grant will be extended to at least 2017 or until at least 50,000 grants have been claimed. This is worth at least £200 million.
Mr Clegg said: "Our economy is growing thanks to sectors like our thriving automotive industry that are helping repair and rebalance the economy, building a fairer society for this generation and the next.
"The UK has the potential to emerge as a world leader in the development, design and manufacture of green vehicles."
He went on: "Owning an electric car is no longer a dream or an inconvenience. Manufacturers are turning to this new technology to help motorists make their every day journeys green and clean.
"This major investment is there to make driving an electric car affordable, convenient and free from anxiety about the battery running out. But it's also about creating a culture change in our towns and cities so that driving a greener vehicle is a no-brainer for most drivers."
Chief Secretary to the Treasury Danny Alexander said: "Our economic plan is delivering a growing economy, rising employment and making Britain a more attractive place to invest. But there is still a large amount to do to ensure our recovery is sustainable and prosperity is secure.
"That is why it's right that we squeeze spending elsewhere to invest in the interests of the future."
He went on: "Ultra-low emission vehicles bring together our most successful manufacturing sectors with our biggest long-term challenge - climate change.
"Britain can be the leading country in the world in developing, manufacturing and using ULEVs. This half billion pound Government investment will help to ensure we rise to the challenge."
Mayor of London, Boris Johnson, welcomed the news and said it was "significant boost" for the green economy in London and across the UK
He said: "Today's announcement by the Government is a green game-changer that brings together a raft of measures to encourage the uptake of ultra-low emission vehicles.
"London is uniquely positioned to spearhead the UK's advance in this sphere and I'm delighted to see that the priority areas we've identified - an Ultra-Low Emission Zone, zero-emission capable taxis, cleaner buses and rapid car charge-points - are set to benefit from a healthy cash injection."
He added that it will help support better air quality in London.