Transport minister Norman Baker has announced new funding of over £46 million for 542 new low carbon buses.
Projects promoting green growth and encouraging use of sustainable local transport are being targeted by the government for investment.
Funds have been paid to 20 bus operators and six local authorities across England and the buses are expected to be in service by March 2012.
“My vision is for a transport system that cuts carbon and creates growth," Mr Baker said.
“Low carbon buses emit around 30 per cent fewer greenhouse gas emissions than standard diesel buses and use around a third less fuel and that is why it was so important to kick-start the market.
“They also represent an important and developing industry which has the potential to create jobs and boost economic growth.
“Green buses are therefore an absolute no brainer, they are the perfect combination of targeted investment that help people make the transport choices that are good for society as a whole.”
Green, low carbon hybrid-electric buses supported by the fund are already in operation in London, Manchester, Oxford and Reading, while electric buses supported by the fund are operating in Durham.