The Liberal Democrats have been calling for such a fund over the course of the past year.

Mr Darling also committed an additional £100m to the maintenance of local authority roads and a further £285m to improve the condition of motorways, following the 'extreme weather' experienced this winter.

"We have taken the tough decisions to improve our transport links," the Chancellor said. "Roads are an essential part of the transport network."

Matthew Lugg, second vice-president of the Association of Directors of Environment, Economy, Planning and Transport, said it was important that this money was 'directed quickly'.

"The £100m is brilliant news, but we don't want too many strings attached. It is important that the money gets out to local authorities quickly and without a bidding process."