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The BBC's David Shukman explains how fracking works
The bidding process for licences to extract shale gas - using the controversial process fracking - will begin later on Monday.
About half the UK is open to exploration, but tightened rules cover areas of outstanding beauty.
Companies granted a licence to begin test drilling will also need planning permission and environmental permits.
The coalition sees shale gas as a major potential energy source. Critics of fracking warn of environmental dangers.
In announcing the so-called 14th onshore licensing round, Business and Energy Minister Matthew Hancock said: "Unlocking shale gas in Britain has the potential to provide us with greater energy security, jobs and growth."
"We must act carefully, minimising risks, to explore how much of our large resource can be recovered to give the UK a new home-grown source of energy."
It is the first time in six years firms have had the opportunity to secure new licences.
Drill down
Robert Gatliff, Science Editor at the British Geological Survey told the BBC it would still be some time before full scale drilling would start.
"The first stage, you'd review all the data you've got. Then you'd want to drill one or two exploration holes and then take samples of the shale and see exactly what the content is and see which have got the most in and which bits are likely to fracture best to get the most oil out."
He said that although surveys suggest there is between 820 and 2000 trillion cubic feet of gas embedded under the UK, "there's no way we'd get all that out".
"If you look at what happens in the US, and that's where you've got to look because that's where they've drilled thousands of holes, they're not getting more than 5%."
"In Britain we're so crowded and we've got these beautiful areas, that reduces the amount we can get out as well."
DemonstrationsAbout half the UK is open for licensing, including parts of National Parks. But applications there will only be accepted in "exceptional circumstances and in the public interest", said the government. The same rules apply for the Broads, Areas of Outstanding Natural Beauty and World Heritage Sites.
"Proposals for such development must recognise the importance of these sites," Communities Minister Lord Ahmad of Wimbledon said.
The licences are likely to prove controversial, as there is a great deal of public opposition to fracking, which involves blasting water, chemicals and sand at high pressure into shale rock formations to release the gas held inside.
Angry demonstrations took place in the West Sussex town of Balcombe last summer as more than 1,000 people protested at a test site operated by energy company Cuadrilla.
Test drilling has also taken place in Lancashire.
Critics of fracking argue that it can lead to earth tremors, water contamination and disruption to rural communities. There are also concerns about methane leakage and diverting resources away from renewable energy.
The industry itself rejects these criticisms, arguing that, if regulated properly, fracking is a safe way to unlock huge resources of gas, which is a cleaner source of energy than coal.
Access rightsThe government is keen to promote fracking in the UK, and has already announced a number of incentives to help kick-start the industry, including tax breaks, payments of £100,000 per site plus a 1% share of revenue to local communities.
It argues that shale gas could be an important bridge to help secure energy supplies until renewable energy capacity is increased.
Others argue that while it may be cleaner than coal, it is still a hydrocarbon that emits CO2 linked to global warming.
In the US, shale gas has seen energy costs tumble, but questions remain about whether the American shale revolution can be replicated in the UK and elsewhere.
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