Of this investment, £150m will go towards cleaner buses and taxis, which is planned to include new vehicles on the road, as well as retrofitting existing engines to reduce nitrogen oxide emissions.
This retrofitting has been successful in the past, with The Department for Transport (DfT) awarding over £27m to clean up almost 3,000 of the country's oldest vehicles since 2013.
Transport Secretary, Chris Grayling, said: “We are absolutely determined to reduce carbon emissions from transport as part of our ongoing commitment to tackle climate change.
“This government is committed to improving air quality and reducing pollution in towns and cities, which is essential for people’s health and the environment.
“We are already making headway through our investment in low emission vehicles, greener public transport and walking and cycling, as well as grants for innovative advanced biofuel projects.”
Lorries and planes are being targeted for decarbonisation too, with £20m intended for an advanced renewable fuel demonstration competition, which will provide grant funding for building demonstration-scale advanced renewable fuel plants.
There will also be £80m invested in improving charging infrastructure for electric car owners, with a Workplace Charging Scheme now open for applications.
This investment follows proposals made by the DfT last month for an increase in the number of electric charge points for vehicles.
Go Ultra Low head, Poppy Welch, said: “The £80 million investment in charging infrastructure is vital as growth in the UK electric car market continues to accelerate.
“This is fantastic news for motorists and the continuation of incentives for plug-in vehicles through company tax and salary sacrifice schemes will give thousands more people the option of choosing the very lowest emitting cars and allow more businesses to benefit from adding electric vehicles to their fleets.”
A further £100m will support plans to develop and test connected and driverless vehicle technology.