British motorists are to be offered up to £5,000 to encourage them to buy electric or hybrid cars under a new UK government plan.

The plan also sets aside £20 million for charging points and infrastructure to develop a network of what the government calls "electric car cities".

The incentives will be offered from 2011 when a new generation of electric cars is expected to become available.

Environmental groups said it was a step in the right direction but fell short of initiatives in other European countries like Denmark who were streets ahead.

Business Secretary Peter Mandelson and Transport Secretary Geoff Hoon announced the plan in Scotland as part of a £250 million scheme to cut emissions and at the same time help the struggling motor industry.

"Cutting road transport CO2 emissions is a key element to tackling climate change," said Mr Hoon. "Less than 0.1 per cent of the UK's 26 million cars are electric, so there is a huge untapped potential to reduce emissions.

"The scale of incentives we're announcing today will mean that an electric car is a real option for motorists."

Electric cars cost an average of £12,000.

Last week, London mayor Boris Johnson announced a plan to introduce thousands of charging points across the capital.

A national demonstration project will give a small sample of some 200 motorists the opportunity to drive a cutting-edge car and give feedback to the industry.

Green groups said the plans would make little difference if the electricity used to power them came from dirty coal-fired power stations.

"The cash that Geoff Hoon is offering to motorists would only put 26,000 new electric cars on the road - that's just 0.1 per cent of the total number of cars in the UK," said John Sauven, Greenpeace's executive director.