A £255 million fund is expected to be unveiled to help councils speed up local measures to deal with pollution from diesel vehicles, as part of £3 billion spending on air quality.
The measures are set to be included in a court-mandated clean air strategy the Government is due to publish on Wednesday, just days before the deadline set by the High Court.
The expected move to ban petrol and diesel vans and cars follows similar plans announced in France this month and amid increasing signs that the shift to electric vehicles is accelerating.
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On Tuesday, BMW announced plans for an electric Mini to be assembled at its Oxford plant while earlier this month Volvo unveiled its moves towards cleaner cars.
The Government was ordered to produce new plans to tackle illegal levels of harmful pollutant nitrogen dioxide after the courts agreed with environmental campaigners that a previous set of plans were insufficient to meet EU pollution limits.
Despite government efforts to delay publication of the plans until after the general election, ministers were forced to set out the draft plans in May, with the final measures due by July 31.
It is thought ministers will also consult on a diesel scrappage scheme to take the dirtiest vehicles off the road.
Campaigners have demanded the final plans should include government-funded and mandated clean air zones, with charges for the most polluting vehicles to enter areas with high air pollution, as well as a diesel scrappage scheme.
Their calls for charging zones were backed up by an assessment published alongside the draft plans which suggested they were the most effective measures to tackle nitrogen dioxide, much of which comes from diesel vehicles.
But ministers have been wary of being seen to "punish" drivers of diesel cars, who they claim bought the vehicles in good faith after being encouraged to by the last Labour government on the basis they produced lower carbon emissions.
They favour local measures such as retrofitting buses and other transport to make them cleaner, changing road layouts and even altering features such as speed humps and re-programming traffic lights to make traffic flow more smoothly to reduce pollution.
The expected move to ban diesel and petrol cars and vans by 2040 comes after similar plans were announced in France this month and amid increasing signs that the shift to electric vehicles is accelerating, with BMW announcing plans for an electric Mini and Volvo unveiling its moves towards cleaner cars.
Air pollution is linked to around 40,000 premature deaths a year in the UK, and transport also makes up a significant share of greenhouse gas emissions.
A government spokesman said: "Poor air quality is the biggest environmental risk to public health in the UK and this government is determined to take strong action in the shortest time possible.
"That is why we are providing councils with new funding to accelerate development of local plans, as part of an ambitious £3 billion programme to clean up dirty air around our roads.
"Our plan to deal with dirty diesels will help councils clean up emissions hotspots - often a single road - through common sense measures which do not unfairly penalise ordinary working people.
"Diesel drivers are not to blame and, to help them switch to cleaner vehicles, the Government will consult on a targeted scrappage scheme, one of a number of measures to support motorists affected by local plans."
Environmental law firm ClientEarth took the Government to court over its clean air strategy.
Its chief executive James Thornton said: "The Government has trumpeted some promising measures with its air quality plans, but we need to see the detail.
"A clear policy to move people towards cleaner vehicles by banning the sale of petrol and diesel cars and vans after 2040 is welcome, as is more funding for local authorities.
"However, the law says ministers must bring down illegal levels of air pollution as soon as possible, so any measures announced in this plan must be focused on doing that.