"These are still early days but today is an important step. The trials present a fantastic opportunity for this country to take a lead internationally in the development of this new technology," U.K. transport minister, Claire Perry, said in a statement.
Google has been testing driverless cars in the U.S. for some time, and the technology giant has said it aims to bring the technology to consumers by 2017. Meanwhile, taxi hailing app Uber has opened a research center to explore driverless car technology.
Britain allowed the testing of driverless cars after a report it commissioned found there was no legal barrier to trailing them if there were "test drivers" in the vehicle too.
The government said it will publish a "code of practice" in the Spring of this year to lay out the rules and then look to amend official national legislation in 2017. It added that it would seek to change international regulation in 2018 by liaising with the global bodies responsible.
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Britain is looking to beat the U.S. to the wide-spread use of driverless technology and said the industry could be worth £900 billion by 2025. North America was the first country to allow the testing of autonomous vehicles, but it is limited to four states. In Europe, Germany and Sweden are also processing reviews.
The U.K. said it was ahead of its competitors as the "regulatory environment now sets it apart as a premium location for developing new technology."
But major challenges remain and the government's timeline may be too optimistic, one experts warned.
"The biggest obstacles in the driverless car becoming a mainstream reality are safety and how various regulations will adapt. There still a huge unanswered question around where responsibility lies in the case of an accident or emergency," Rainer Mehl, head of global automotive at IT consultants NTT DATA, told CNBC via email.