Jenson Button drives his BAR round Piccadilly Circus in 2004 © Getty Images Enlarge

The British Government has announced it will legislate to allow councils to host motor racing on public roads, opening the door to an F1 race around the streets of London, the Telegraph has confirmed.

Under the new legislation councils will have the power to close highways in order to host events, opening up opportunities for motorbike races and rallies across Britain, which has been approved now in anticipation of Formula E's race around Battersea Park in the summer of 2015. It does also raise the possibility of a London Grand Prix becoming a reality, though the logistics of actually putting on such an event remains a major stumbling block.

Making the announcement, prime minister David Cameron said: "I can announce today that we are going to enable more road races for GB motor sport. We think this will be really useful to British motor sport: more races, more events, more money coming into the country and more success for this extraordinary industry."

Bernie Ecclestone has been a long-time supporter of the idea of a London Grand Prix, which would see a race contested on a circuit passing landmarks such as Buckingham Palace and Big Ben. London mayor Boris Johnson is known to be a keen advocate, though Westminster Council, the local authority which would put on the race, appears to remain uncommitted to the plan.

The London Grand Prix could raise as much as £100 million in ticket revenues and endorsements, with the potential global television audience around the one billion mark. In 2012 Bernie Ecclestone raised the prospect of a London Grand Prix and a provisional circuit was discussed. "It's no joke, 100% completely no joke," he said. "With the way things are, maybe we would front it and put the money up for it. If we got the OK and everything was fine, I think we could do that."