The Minister for Transport does not intend to deregulate the bus market in the greater Dublin area, he told the Dáil.

Instead Mr Brennan will introduce "controlled competition" in the form of franchising of routes or groups of routes. He intends this to start at the beginning of 2004, and up to 25 per cent of the market will be franchised out.

Outlining his proposals for the greater Dublin area, the Minister said he would continue to set overall regulatory policy. He would, however, "establish an independent body to procure public transport services and to allocate current and capital funding for specific purposes".

Mr Brennan told Labour's transport spokeswoman, Ms Róisín Shortall, that he would not be "going down the UK route" of deregulation, which "made a mess of the railway system and the bus service outside London". He was interested in the franchise route "which is not head-to-head competition with everyone rushing for the same bus stop". It was a model similar to one used in London, Stockholm and Helsinki, where the "bundle of routes is tendered out" by the regulator. He also stressed that the free bus pass system would still operate, as the Government paid for that scheme.

Mr Denis Naughten, Fine Gael's transport spokesman, said the Minister had not addressed the issue of congestion in relation to competition and how it would affect Dublin Bus or Bus Éireann.

Mr Brennan said that "whether the bus system is totally State-owned or whether the private sector can compete, will not affect the problem of congestion".

He said that even if fares were halved, he doubted the numbers using buses would change significantly. "Fares will not change the habits of a lifetime."