Ministers are looking to reform the UK Highway Code so that public roads can be used by autonomous vehicles.
The revelations come just weeks after Google unveiled its first fleet of self-driving cars.
Science minister David Willetts told the Daily Mail this weekend that the UK Highway Code is currently unsuitable for testing the nation's own driverless vehicles, such as those being developed within Oxford University’s department of engineering science.
“There is British technology, and it's a lot cheaper than the Google technology,” said Willets.
“But whereas the Google car, they have notched up more miles, so we have got to ensure that the British has its own opportunity to get tested in a wider range of environments and that's what we are working on with the department for transport.”
Oxford University's RobotCar UK has an off-the-shelf computer in the boot that is connected to various cameras and lasers hidden around the car’s body. The car can offer to engage autopilot for routes it has driven before, while the driver can regain control whenever they wish by tapping the brake pedal.
Those behind the research at Oxford claim the bolt-on prototype system costs around £5,000, believing that this will eventually be reduced to just £100.
Existing regulations in the US that have allowed Google's previous driverless cars to be tested on public roads stipulate that a human driver be present in the driver's seat at all times. But California's Department of Motor Vehicles is expected to tweak it's regulations in September to allow for Google's latest autonomous car, which has no controls for human drivers to interact with.
Willets claims that it's important for the UK to keep pace.
"You need a regulatory regime so that these are permitted," he told the Mail.
“What America is going to have is a legal regime in California that permits you to travel in one without requiring someone in the so-called driver's seat.
“Certainly there are new regulations being drafted in California and obviously this is something I have discussed with the Department for Transport, we are aware of it. We need to work on these type of regulations so that as the technology develops in Oxford and elsewhere we can see them used.”
Autonomous vehicles recently gained a boost after an amendment to the United Nations’ 1968 Convention on Road Traffic that stated cars were permitted to control themselves as long as the system “can be overridden or switched off by the driver”.
The government’s infrastructure plan commits to reviewing the law to “ensure there is a clear and appropriate regime for the testing of driverless cars that supports the world’s car companies to come hand test them here.”