Council chiefs in Leeds are seeking to scrap free bus passes for the majority of Catholic schoolchildren in the city.
Free home to school transport is also under threat for some school and college students aged over 16 and for some youngsters aged over 16 with special educational needs.
The council, which is trying to save £54.9m over the next year, spends around £4.76m a year on non-statutory free home to school travel for some children.
John Grady, of the Diocese of Leeds, has said that scrapping passes could lead to falling numbers at Catholic schools as parents weigh up costs and school choice.
Council chiefs say young people who are already legally entitled to free home to school transport will not be affected by any changes to the policy. Free transport would also remain available to faith schools for pupils from low income families.
Coun Judith Blake, executive member responsible for children services, said: “In these times of economic uncertainty, it is necessary for us to assess that we are spending council tax payers’ money as wisely as possible. This is why we have decided to look at what we currently spend on non-statutory services to make sure these are both fit for purpose and value for money.”
But she added: “Should the existing policy be changed we would ensure future provision is implemented carefully and coupled with imaginative and innovative solutions to ensure children and young people are provided with affordable and effective support.”
In Wakefield, free bus passes for children attending Catholic schools are to be withdrawn through a phased approach from September 2013.
Council chiefs say a final decision on the future of the transport policy would be made following a 28-day consultation which starts this month. Click here to register and have your say on the stories and issues that matter to you