The Chancellor said the Government would increase the size of the rural transport fund, set up last year, by 20 per cent to pounds 120m. He said this would mean pounds 10m of extra resources a year for two years.
Bus companies will benefit from a pounds 50m rebate in fuel duty to cover the increases in duty announced yesterday. The industry will also benefit from tax breaks being offered for buses provided by employers for their workforce.
The Department for the Environment, Transport and the Regions said that the money would be used for infrastructure projects rather than subsidising fares. The money could be used to encourage provision of better integration and to improve the quality of stations.
Extra funds for improving security at rail and bus stations could provide for more closed-circuit television and other security devices. The details will be announced shortly.
John Reid, the Transport minister, said: "This is a reforming Budget with measures which show that transport is a key element of the Government's agenda. It is using the tax system to help deliver our objectives for integrated transport - better choice with cleaner vehicles.
"There's an extra pounds 50m to support the bus network, an extra pounds 20m for rural transport and measures to enhance security at transport interchanges."
The bus, hailed as the "thoroughbred not the workhorse" of local transport by the Deputy Prime Minister, John Prescott, will also benefit from a pounds 1,000 cut in Vehicle Excise Duty for vehicles with clean engines.
The Confederation of Passenger Transport warned that the measures penalised urban and inter-urban services and school transport, as they did not receive the fuel rebate. David Watson, of the CPT, added: "pounds 20m over two years is good in principle but it is not a lot."
The bus operator Arriva welcomed the Budget measures as a further boost to public transport. It said that grants for public transport now totalled pounds 120m, and it welcomed the introduction of tax reliefs for bus services provided by employers for their staff.
Arriva, which buys more than 500 buses a year, also welcomed the pounds 1,000 cut in the licence fee for cleaner buses. But it said that it would seek clarification on whether increased motoring taxes would be "ring-fenced" for investment in transport infrastructure.