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Only five UK local authorities put bids in for a share of the Government's £10 million fund to research autonomous vehicles on public roads from January 1, 2015.
Four of the bids are under consideration by Innovate UK and three will be chosen in December. Each local authority will work with an industry partner and feature driverless technology in a car in an urban environment.
They will last between 18 and 36 months. Any decisions on autonomous technology being given the green light will be made after this study, which will influence changes in legislation.
The Department for Transport is also launching a separate study to research driver and road user behaviour to help support the autonomous vehicle research.
Claire Perry, parliamentary under secretary of state at the Department for Transport, spoke at the The Parliamentary Advisory Council for Transport Safety Driverless Vehicles Conference: "Today's vehicles are so technically advanced that there is the real prospect that driverless cars could be on our roads in a relatively short amount of time.
"But what makes this so intriguing isn't just the technical challenge, it's the cultural challenge and a challenge for politicians to solve."
The DfT has chosen to test autonomous vehicles on urban roads as they will be more complex and provide more challenges compared to motorways.
While the lack of interest from local authorities in helping to develop driverless technology may hamper the speed at which the technology can be introduced in the UK, the DfT is keen on the potential cost savings.
Perry said there was the potential for congestion to be improved without having to make major changes to the existing road networks in the UK with autonomous cars able to group closer together, creating more lanes on existing motorways, without having to invest the money to widen them.
The DfT also recently concluded a feasibility study of platooning for HGVs on the UK trunk road network using vehicles with partial automation, but with a driver in each vehicle. Perry has approved the next phase of research which will start next year.
Perry said: "Driverless technology is the future. We can't avoid it and I don't want us to: I want the UK to learn as much as we can and as quickly as we can. And that includes understanding how these vehicles interact with society and other road users."
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