You need broadband to make these devices function properly. It would be better to invest money in that

Ian Buckley, Zen Internet

Energy-saving systems to reduce bills and the cost to the environment will also be developed.

The home will not be the only focus of the vIRC.

Cars that talk to service stations and personal digital shopping assistants that alert you to shops selling goods you need could also be in the pipeline.

E-commerce minister Douglas Alexander believes investment in new technologies is vital.

"This programme will bring us closer to mass-market products and services with the potential to improve home security, cut energy consumption and improve the quality of life," he said in a statement.

With the electronic services industry estimated to be worth �160bn by 2006, the UK Government is keen to get its slice of the pie and hopes this investment will kick-start a boom.

What about broadband?

But not everyone is convinced that the government has got its spending priorities right though.

High-speed internet access will be crucial to powering the networked home and yet huge swathes of the country have no chance of getting the technology.

Critics say the �30m the government has pledged to get broadband into rural areas is not enough.

"You need broadband to make these devices function properly. It would be better to invest money in that," said Ian Buckley, marketing manger of internet service provider Zen Internet.

The government argues that this investment is part and parcel of the whole drive towards broadband.

"It is true that it will rely on broadband but lack of content is part of the problem and this will ensure there is more out there that uses broadband," said a spokeswoman for the Department of Trade and Industry.

The �40m fund will be split equally between government and industry.