The funding is intended to put low carbon buses within the reach of as many operators and local authorities as possible throughout England.

Bus operators and councils can bid for the money which they can then use towards the additional up front cost of buying low carbon buses.

Transport Minister Norman Baker said:

"We want to support new transport technologies to help make our transport system greener and more sustainable.

"This investment will stimulate the market for low carbon buses by reducing some of the initial costs for operators and councils. It will deliver significant benefits, in particular reducing the impact of road transport on climate change and improving air quality."

Low carbon buses use at least 30 per cent less fuel and emit nearly a third less carbon than a conventional bus, yet they currently make up just 0.2% of buses on the road.

The funding will support investment in more low carbon buses as well as addressing the information gap about their performance by requiring the winning bidders to share information with others in the industry.