Tests will begin on a small number of roads within months before pilots are carried out on 70mph carriageways later this year.
The first trials are expected to be carried out on roads in Milton Keynes, Bristol, Coventry and Greenwich.
The Chancellor believes automated vehicles could lead to the most “fundamental” change to transport since the invention of the petrol engine.
He hopes they will revolutionise motoring by 2020, and put the UK at the forefront of the new technology.
Mr Osborne said: “At a time of great uncertainty in the global economy, Britain must take bold decisions now to ensure it leads the world when it comes to new technologies and infrastructure.
“That’s what my Budget next week will seek to do.”
He added: “Naturally we need to ensure safety, and that’s what the trials we are introducing will test.
“If successful, we could see driverless cars available for sale and on Britain’s roads, boosting UK jobs and productivity.”
Driverless cars, which can alert motorists to accidents and traffic jams, could eventually prevent 95% of crashes, according to the Treasury.
“Truck platooning” tests will also be carried out on motorways, where lorries travel in tightly-packed convoys to improve fuel consumption by reducing drag.
The automated juggernauts are set to take to UK roads this year.
A driver in the lead vehicle would control the steering, acceleration and braking of the convoy.
But the drones would have a driver in each cab as a safety measure.
A stretch of the M6 near Carlisle has reportedly been earmarked as a test route.
In Germany, a driverless lorry developed by Daimler was tested on a public road last October.
Last month, a Google driverless car was involved in a collision with a bus in California.
The US tech firm’s automated cars have been involved in more than a dozen collisions, but in most cases the vehicles were rear-ended.
