The AI industry has been waiting a while for this kind of firepower to go along with government backing.
It follows Rishi Sunak's focus during his time as Prime Minister on making the UK an AI "superpower" that could rival the US and China.
At the time, many of Sunak's proposals were geared towards mitigating future risks of highly powerful AI systems.
His government's emphasis on "safety" seems largely absent in this new plan - instead focusing on maximising opportunities, growth and innovation.
Among the government's proposals are:
The government has also proposed a boost to UK infrastructure as part of the plan, with tech firms committing £14bn towards large data centres or tech hubs.
But shadow science secretary Alan Mak said Labour was "delivering analogue government in a digital age".
While the push towards AI is seen as way of cutting down on public spending, Mak accused Labour of undermining this goal with its economic policies.
"Labour's economic mismanagement and uninspiring plan will mean Britain is left behind," he said.
Tim Flagg, chief operating officer of UKAI - a trade body representing British AI businesses - said the proposals take a "narrow view" of the sector's contributors and focus too much on big tech.
"AI innovation spans industries, from small enterprises to non-tech sectors, all driving the new industrial revolution," he said.
"It's time the government recognised this broader definition and tapped into the full potential of AI across the UK."