Prime minister David Cameron has pledged £45m to help develop the internet of things.
He made the announcement at the CeBIT technology trade show in Hannover, Germany.
"I see the internet of things as a huge transformative development - a way of boosting productivity, of keeping us healthier, making transport more efficient, reducing energy needs, tackling climate change," said Cameron.
"Take British ingenuity in software, services and design, add German excellence in engineering and industrial manufacturing and together we can lead in this new revolution."
This additional investment brings the total amount of government funds earmarked for the internet of things to £73m.
Sir Mark Walport, chief scientific adviser to the UK government, will now carry out a review into how these new technologies can be best exploited.
The announcement was received warmly by industry.
"The internet of things has long been heralded as a potentially transformative technology. And with 212 billion devices expected to be connected to the internet by 2020, it is clear that it won't be long before the internet changes from being just something that we access, to something that exists all around us; at any time and in any location," said Joy Gardham, regional director EMEA west for networking supplier Brocade.
"We are already seeing examples of this as wearable technology becomes increasingly mainstream but that is just a small part of what the internet of things can achieve. As David Cameron has said, the wider potential benefits - to business productivity, healthcare, transport and energy management - will be genuinely transformational. It is therefore great to hear that the UK government is investing in the development of technologies that will help make this concept a reality," he added.
The internet of things describes how objects, such as traffic lights, heart monitors and parts of buildings, can be connected to the internet to enable remote monitoring and control, and data gathering.