The grant will be distributed directly to the consumer at the point of purchase and will be available across the UK from January 2011, by which time a range of eligible vehicles is expected to be available.

The government also plans to roll-out GBP30m fund for a network of electric vehicle hubs, called Plugged-In Places in car parks, major supermarkets, leisure and retail centers, and on the street.

London, Milton Keynes and the North East were named as the first Plugged-In Places; and between them they will be installing over 11,000 vehicle recharging points during the next three years.

The initiatives are part of GBP450m government strategy to support the creation of a market for ultra-low carbon vehicles. The program will help to meet the UK’s commitment to reduce carbon emissions from transport; as well as creating new business opportunities for UK-based companies in the automotive and charging infrastructure sectors.

The Plug-in Car Grant will be open to both private and business fleet buyers and to be eligible for the scheme, cars will have to pass performance criteria to ensure safety, range, and ultra-low tailpipe emissions.

The Plugged-In Places will provide the charge points to support these vehicles, demonstrating how electric vehicle charging works in practice in a range of different settings – urban, suburban and regional and testing new technologies such as rapid charging, inductive charging and battery swap.

Andrew Adonis, transport secretary, said: “Decarbonising transport isn’t an aspiration – it’s a reality. By this time next year, cutting edge motorists will be on the roads with these next generation cars they’ve purchased because of our help. And thanks to the Plugged-In Places we will have in place infrastructure to support this growing early market.

“Transport has a huge part to play in helping the UK meet its stringent emission reduction targets and today’s announcement is another step on the road to putting the UK at the global forefront of ultra-low carbon vehicle development, manufacture and use.”