In the city of the future, the satnav will direct drivers not only to their destination, but route their journey straight to the nearest available parking space.

For Milton Keynes residents, this vision of motoring utopia could soon become reality, after the council signed a contract with BT to install a public network for "the internet of things" – the idea of linking smartphones to household hardware such as washing machines and heating, and now car park spaces.

Digital parking spaces that signal when they are empty, and smart bins that send a message to rubbish collectors when they are overflowing, will be installed across the city centre from September in the first city-wide project to trial these technologies in the UK. In a joint project with Cambridge based startup Neul, BT is building 15 base stations across Milton Keynes which will be connected to the internet and be able to pick up signals from sensors in thousands of objects.

Over the next 18 months, the trial will be extended beyond bins and parking to dozens of things such as rodent traps, soap dispensers, water meters and central heating systems.

"It's probably the biggest revolution we've seen in technology, this embedding of computing in everything around us, and it will make our lives more convenient, more fun and less wasteful," said Neul's chief executive Stan Boland.

BT and Neul are looking for ideas that could be useful not only to the daily lives of residents and businesses. The technology might be suitable for tracking children, people with Alzheimer's, and even lost pets. It could also be used to create intelligent buildings, with security tags for staff and internet-connected fire alarms. Initially, around 50 to 100 bins and parking spaces will be wired up but within two months this will expand to about 1,000 of each.

Parking spaces will be fitted with studs, about 6in in diameter, that look like cat's eyes and are glued to the tarmac. Developed by a company called Deteq that has already tested them in Ipswich and a multistorey car park in Crawley, the studs detect radio waves like those emitted by mobile networks. Because cars block most radio waves, the sensors know when the space is full.

They send a signal back to one of Neul's base stations, which are being attached by BT to masts and street lamps. The studs are powered by two AA batteries but need very little energy to operate, which means they can last up to 10-15 years.

The location of empty spaces, overlaid on Google maps, will be visible on the Milton Keynes website, along with data about which car parks are filling up or emptying. The developers are working on ways to feed the data into satnavs and smartphones to help drivers get to the nearest space. Deteq also has an app that allows drivers to pay for parking without having to put money in the meter, although this will not be available to begin with.

"The initial application for the council is to make more efficient use of parking spaces," said BT project director Alan Ward. "What we want to move on to is linking your parking spot to your journey planner, reducing the time you spend travelling looking for somewhere to park."

Congestion in town centres is often made much worse by drivers circling for a space, and Milton Keynes is hoping the technology will reduce traffic jams.

By connecting its bins, the council expects to save money by sending rubbish trucks only to locations where they are needed. Its bins will use ultrasound, bouncing sound waves across the top levels of the container to detect rubbish, and sending a signal back to base when full.

"If you know where something is or what its status is you can resource your engineers to go and fix it, empty it, make less journeys," said Ward. "There are immediate savings in efficiencies like that."