British entrepreneurs are being challenged by the government to develop "imaginative and creative technological adaptations" to help Britain’s 12.2 million disabled people and their families lead more independent lives.

The government says one in five people in the UK have a disability and that disabled people and their households have a spending power of over £200 billion. Yet the development and manufacture of aids, adaptations and products for disabled people, it says, has not kept pace with the use of new technologies, like smartphones, GPS, plasma TVs, and Kindles.

The government’s Accessible Technology Prize aims to inspire technological innovation to assist disabled people in fields as diverse as education, the home, leisure, transport and work. Ministers hope it will encourage more budding entrepreneurs to tap into a market predicted to be worth over £500 million in Britain – and $3 billion (£1.87 billion) internationally.

The competition – which is the first of its kind and is run in conjunction with innovation charity Nesta – opens this week to entrants. Twenty five semi-finalists will receive a £6,000 contract to take their ideas forward. That will be whittled down to 10 finalists, who will each be awarded another £10,000 to develop their ideas into a prototype. The winning inventor will be announced in 2016 – with a £50,000 contract to take the idea to market.

Mark Harper, minister of state for disabled people, said: "There’s a serious gap in the market at the moment in Britain in this sector and we want more entrepreneurs to focus on creating devices which help disabled people lead more independent lives.

"This is a vastly untapped multi-million pound market, which we want more business people to see the potential of. As part of our long-term economic plan, we hope the prize will spur more people on to enter the accessible technology industry and make a difference to the lives of millions of disabled people in Britain."