Darpa, the research arm of the US Department of Defence, has commissioned a new Grand Challenge to develop automatic cars capable of travelling on normal roads.

The Darpa Urban Challenge will kick off in November 2007 with a first prize set at $2m and second and third prizes worth $500,000 and $250,000 respectively.

Entries must take fewer than six hours to navigate 60 miles of freeway, junctions and urban driving, including obeying traffic laws and avoiding real drivers.

The contest was announced just months after a team from Stanford University built a car that won the first Grand Challenge by navigating 131.6 miles of the Mojave desert without hitting anything.

"Grand Challenge 2005 proved that autonomous ground vehicles can travel significant distances and reach their destination, just as you or I would drive from one city to the next," said Darpa director Tony Tether.

"After the success of this event, we believe that the robotics community is ready to tackle vehicle operation inside city limits."

Darpa is offering winning teams up to $1m in technology development funds, with the government getting limited rights to any resulting patents.

Entries will be reviewed and the best will get $50,000, with a further $100,000 available for those that get a place in the November 2007 finals.

Darpa is investing in the scheme because the US Army has set the goal of making one-third of its vehicles autonomous by 2015.