New cars and vans powered wholly by petrol and diesel will not be sold in the UK from 2030, Boris Johnson has said.
But some hybrids would still be allowed, he confirmed.
It is part of what the prime minister calls a “green industrial revolution” to tackle climate change and create jobs in industries such as nuclear.
Critics of the plan say the £4bn allocated is far too small for the scale of the challenge.
The total amount of new money announced in the package is a 25th of the projected £100bn cost of high-speed rail, HS2.
The government says it is part of a broader £12bn package of public investment that is expected to draw in much more private sector funding.
The plan includes provision for a large nuclear plant – likely to be at Sizewell in Suffolk – and for advanced small nuclear reactors, which it is hoped, will create an estimated 10,000 jobs at Rolls-Royce and other firms.
The government hopes that as many as 250,000 jobs will be created overall – especially in the north of England and in Wales, with 60,000 in offshore wind.
The clean energy revolution will also affect some people’s homes.
The government will bring forward, to 2023, the date by which new homes will need to be warmed without using gas heating.
It will aim to install 600,000 heat pumps a year by 2028 – these are low-energy electrical devices for warming homes.
And it has extended the Green Homes Grant for home insulation for a year after the first tranche was massively over-subscribed.
Clean hydrogen will be blended into the natural gas supply to reduce overall emissions from gas, and the government wants a town to volunteer for a trial of 100% hydrogen for heat, industry and cooking.
The hydrogen – attracting a subsidy of up to £500m – will be produced in places such as north-east England, partly by energy from offshore wind.
BBC