Dublin is due to have 200 more buses on its streets over the next two years after Dublin Bus was today allocated €30 million to expand its fleet and plans for 100 privately operated buses were announced.
Minister for Transport Martin Cullen also allocated funding for Bus Eireann to increase its fleet by 160 in funding worth a further €50 million.
A strike was averted earlier this month when Mr Cullen assured unions that he would be seeking Cabinet approval for the investment in the State's bus fleet as promised during the 2002 general election.
Mr Cullen said the plans, which are part of the Transport 21 initiative, were a combination investment and structural reform aimed at introducing competition while incentivising efficiency.
"It follows extensive consultation with interested parties and study of mechanisms used internationally to achieve efficiency and effectiveness in the bus market. The Government's strategy will deliver immediate benefits and secure steady and continuing progress into the future.
Mr Cullen today also announced that the legislation establishing a new Dublin transport authority was at and advanced stage. Once the body is in place, it will regulate both Dublin Bus and private operators and allocate all public subsidies for services in the Greater Dublin Area.
One of its first tasks will be to award licences for the operation of 100 private-sector buses. It is envisaged a further 100 buses will be licensed at a later date giving private operators 15 per cent of the city's fleet of 1,800.
When this process is complete, all new routes will be subject to a competitive tendering process open to all operators.
Mr Cullen said: "The Dublin transport authority will allocate all subventions, both to Dublin Bus and to new operators, on an objective, transparent and even-handed basis so as to maximise value for public money.
A further €50m is to be given to Bus Éireann for the acquisition of 160 coaches from 2007 for services outside Dublin.
New legislation will also be brought forward to replace the Road Transport Act, 1932 with a modern regulatory and licensing regime in line with EU competition laws in the sector.
The issue of bus reform had - up until the revelations about the Taoiseach's finances - been regarded as first test of the Coalition co-operation since Michael McDowell became Tánaiste.
The PDs and Fianna Fáil have been at odds over the issue with the former insisting competition be introduced into the market.
Green Party transport spokesman Eamon Ryan said today's announcement was ended "the four-year logjam between Fianna Fáil and the Progressive Democrats, which has crippled bus services in Dublin city". However, the regulator's powers over design of bus routes had not been clarified, he added.