Passengers are set to board the bus service in Edinburgh from the spring after it became one of seven autonomous passenger and freight vehicle programmes to win a share of the new funds.
The service, which will receive £10.4m in funding, will be comprised of five self-driving single-decker buses that will carry members of the public between Ferrytoll park and ride in Fife and the Edinburgh Park train and tram interchange via the Forth Road Bridge.
As well as the Edinburgh project, automated shuttles in Belfast and lorries in Sunderland will also get support.
The North East Automotive Alliance will receive £8m to roll out self-driving and remotely piloted HGVs between the Vantec and Nissan sites in Sunderland.
Hub2Hub will receive £13.2m to develop a new, zero emissions, self-driving HGV with Asda and Belfast's Project Harlander will get £11m to deploy a self-driving shuttle service around Belfast Harbour.
The Department for Transport believes that self-driving vehicles could "revolutionise public transport and passenger travel", create up to 38,000 jobs and be worth £42bn to the UK economy.
Currently, plans are afoot to allow self-driving vehicles on UK roads in 2025, but certain models of cars, coaches and lorries with self-driving features could even be operating on motorways this year.
Autonomous driving is expected to improve road safety by reducing human error, which has been identified as the cause of 88 per cent of all traffic accidents.
Business secretary Grant Shapps said: "In just a few years' time, the business of self-driving vehicles could add tens of billions to our economy and create tens of thousands of jobs across the UK. This is a massive opportunity to drive forward our priority to grow the economy, which we are determined to seize.
"The support we are providing today will help our transport and technology pioneers steal a march on the global competition, by turning their bright ideas into market-ready products sooner than anyone else.
Forecasts predict that by 2035, 40 per cent of new UK car sales will have self-driving capabilities.
The UK's current 'safety ambitions' for self-driving vehicles will mean they are equivalent in safety to a competent and careful human driver.
Vehicles will need to meet certain standards to be allowed to 'self-drive' on the roads throughout the lifetime of the vehicle. Organisations overseeing self-driving vehicles could face sanctions if standards are not maintained.
