The government has today reassured the green car sector that its Plug-In Car Grant scheme will continue to run until 2015, despite concerns about the relatively slow uptake of the incentive scheme.

Ministers confirmed today that the £300m grant scheme would run until the end of the parliament, offering 25 per cent off the price of eligible electric and plug-in hybrid cars up to a value of £5,000.

They also announced that the scheme would be expanded to provide support for plug-in vans, offering purchasers 20 per cent off the price of the vehicle, up to a value of £8,000.

"Car buyers have had a year to take advantage of our grant and now it's time for van buyers to get their chance to go electric," said Transport Minister Norman Baker in a statement. "This is great news for businesses given the lower running costs of these vehicles – fleet buyers tell us that this is one of the most important factors influencing their decision on what to buy."

The move is bound to be welcomed by businesses pursuing green transport policies, many of which have argued that predictable journey requirements and concerns over fuel costs mean that electric vans offer a credible alternative to conventional vans.

"An upfront purchase grant, when combined with lower running costs and tax benefits, can make switching to an ultra-low carbon van an attractive choice for businesses," said Business Minister Mark Prisk. "The technology also fits well with a large portion of the van market that rely on short urban trips to and from base."

The government has today set out criteria that manufacturers of "ultra-low carbon" vans will have to meet to qualify for the grant, including an emissions target requiring eligible vans to emit an average of less than 75 grams of carbon dioxide (CO2) per kilometre. As such both plug-in hybrid and pure electric vans can qualify for the grant.

The government is now inviting manufacturers to apply to qualify for the scheme with a view to the first grants being issued later this year.

The expansion of the scheme brings to an end fears that it could be subject to budget cuts following a disappointing level of uptake last year.

According to the latest figures, just over 1,000 plug-in vehicles registered for the grant scheme last year, falling well short of the 8,600 cars the scheme's budget could cover.

However, a spokeswoman for the Department for Transport said today's announcement confirmed the government remained fully committed to the grant scheme through to 2015.

"We said there would be a review of the scheme, that review has been completed and the decision is to continue with the scheme and expand it to vans," she said. "Some people have said take-up has been slow, but electric vehicles are an emerging market and there is still only a limited number of models available. We expect the market to expand as more models become available."

Currently 10 cars are eligible for the Plug-In Car Grant scheme, although only five of them were available last year, with the remaining five eligible models scheduled to be launched later this year.