A total of 50,000 vehicles fitted with satellite navigation systems will be monitored to produce detailed reports on the pattern and location of congestion.
The Government aims to identify congestion hotspots with the information available for use by the Department for Transport (DfT), the Highways Agency, national travel information service Transport Direct and also local authorities.
The data will be supplied by ITIS Holdings, which operates the Floating Vehicle Data (FVD) system in tens of thousands of vehicles. The contract is worth £1.25 million in the first year and £1 million per year for the following two years.
ITIS chief executive Stuart Marks said: 'The Department for Transport oversees the delivery of a reliable, safe and secure transport system and, as congestion continues to affect journey times, we are delighted that our FVD will play an important part in decision-making at both national and local level.
'This contract proves without doubt the flexibility of FVD and our ability to support the commercial sector with real time information for services such as RDS TMC and the public sector in contracts such as this.'
A spokesman for the Department for Transport said: 'The data that the DfT is buying will give both national and local government much better information on the pattern and location of congestion on urban and inter-urban roads.
'By improving our shared understanding of congestion, this new data will improve our collective ability to tackle it effectively. It will provide a strong basis for planning and managing the flow of traffic on England's roads.'
ITIS will provide information to the Government on a monthly basis and will also make available data it has collected since 2001.
Congestion fact file
Source: Department for Transport