Prime Minister David Cameron has approved plans to stage motor sport events on the UK's public roads for the first time, opening the door for the staging of a Formula One race in central London.

Speaking at the opening of a new Formula One Williams factory in Oxfordshire, Cameron said a new law will be brought in to allow all local authorities the powers to host motor sports events.

Local authorities currently have the power to authorise a road closure for sporting and leisure events on the highway, but are not allowed to close the road for a motor race or to suspend the Road Traffic Act.

This means that any event on a public road has to obey speed limits and traffic signals while the requirement for a vehicle to be road legal is also still in force.

“We have a great tradition of motorsport in this country,” Cameron said.

“Today we’re bringing British motor racing back to British roads, to benefit local communities. As part of our long-term economic plan, we are backing our world-leading motorsport industry to support jobs, enhance skills and help us to build a more resilient economy.”

Around 9,000 motor sports events take place each year in the UK, organised by Motor Sport Association member clubs and the Auto Cycle Union member clubs.

The vast majority of these, however, take place at purpose built venues or in remote rural off-road locations.

The new law will allow stage rallies, hill climbs and trials of speed take place on the UK’s public roads for the first time.

The government estimates that the new powers granted to local governments to host motor sport events could create an extra £40m over five years for local communities.

Culture secretary Sajid Javid said: “Motor sport has a huge following in the UK. These changes will provide more opportunities for fans to enjoy the sport locally and give a financial boost to local economies through the added benefits of tourism, shopping and spending.”

Background:

• A London-based Formula One Grand Prix was first mooted in the 1980s, as organisers wanted to add another iconic street race to the F1 circuit – which already includes the famous Monaco Grand Prix.

• In 2012, Spanish bank Santander, then lead sponsor of the British Formula One Grand Prix, unveiled its vision for a street-race route incorporating some of London's most iconic landmarks.