Repossessed cars will be sold by September
Kenyan ministers have been told to give up their plush cars and limit themselves to a single vehicle with a small fuel-efficient engine.
All extra cars and those with an engine capacity of more than 1,800 cc will be confiscated and sold by September, the finance minister said.
Money from their sale will be used to house those still displaced after last year's post-election violence, he said.
Some 300,000 people fled their homes and thousands still live in camps.
But Uhuru Kenyatta, who is finance minister in the power-sharing government that took office in April 2008 after a deal to end the violence, did not give any further details about how the internally displaced people would benefit.
The large power-sharing cabinet has come in for criticism for its cost to the taxpayer.
And the BBC's Noel Mwakugu in the capital, Nairobi, says people are sceptical about whether ministers will actually give up their flash cars.
A similar proposal was made in last year's budget, but never carried out.
However, Mr Kenyatta arrived at parliament to deliver his budget in a relatively modest Volkswagen Passat (2,000 cc) rather that the 3,000 cc S-Class Mercedes usually favoured by ministers, our reporter says.
He also announced a moratorium on the purchase of government vehicles and said officials with a car would be given a monthly fuel allowance.
"I have discussed all these measures with the prime minister and the president and let me clarify that no official vehicle is exempt," he was quoted by Kenya's Capital FM as saying.