The Government is to axe the "crazy" arrangement where some rail companies get paid twice for replacing trains with buses.
In some cases, bus companies running rail replacement services are owned by the same parent company as the train operators.
This means that some are claiming the bus service operators grant (BSOG) for running rail replacement services as well as receiving compensation from Network Rail.
Today, Transport Minister Norman Baker said bus companies will no longer be able to claim the extra BSOG subsidy for running replacement services.
Mr Baker said: "Rail replacement services are quite obviously not a local bus service and I am proposing to put a stop to the highly questionable arrangements where some train operators can get paid twice over for running buses that replace their trains.
"When rail passengers buy a ticket they want to get on a train, not a bus. It is crazy for the public purse to subsidise these so-called rail replacement buses.
"I have been pushing train operating companies to reduce their reliance on decanting all their passengers on to buses at the weekend - I hope this will act as an extra push to make them think again."
This proposal is one of the first conclusions of a major review into how bus subsidy is paid. It is estimated that this change will save the Government around £2 million a year in bus subsidy.
BSOG is intended to help bus companies operating certain local services to keep their fares down and increase the number of services they can run.
But neither emergency nor planned rail replacement services are local bus services in the true sense as the public will be unaware that rail replacement services are running unless they were intending to travel by train in the first instance.
In addition, the general public will not be able to travel on rail replacement services if all seats are given as priority to displaced rail ticket holders.
The full findings from the review of BSOG will be announced in the coming months.
Bob Crow, general secretary of the RMT transport union, said: "It's good news that one of the money-making rackets of the private train operators is to be closed down and we hope they don't just look to recover this nice little earner by exploiting other loopholes elsewhere in the fragmented and opaque rail system."