The government is to extend the £5,000 grant scheme open to anyone who buys a car with plug-in electric power.

It is part of a £500 million move to encourage car owners – and city authorities – to take up the electric car baton and run with it.

The initiative will give cities a chance to win government funding to further the sales of electric cars in their areas, for example by allowing them to use bus lanes or park for free.

Of the total investment, £32 million is earmarked for infrastructure boosts to increase the number of charging points that are currently available.

The £5,000 incentive scheme, which can be used against cars like the Nissan Leaf and Renault Zoe, will continue until 2020, or until at least 50,000 grants have been awarded.

Announcing the new initiative, Deputy Prime Minister Nick Clegg said: "Our economy is growing thanks to sectors like our thriving automotive industry that are helping repair and rebalance the economy, building a fairer society for this generation and the next.

"The UK has the potential to emerge as a world leader in the development, design and manufacture of green vehicles."

He went on: "Owning an electric car is no longer a dream or an inconvenience. Manufacturers are turning to this new technology to help motorists make their every day journeys green and clean.

"This major investment is there to make driving an electric car affordable, convenient and free from anxiety about the battery running out. But it's also about creating a culture change in our towns and cities so that driving a greener vehicle is a no-brainer for most drivers."