West Sussex County Council said it would subsidise new operators to take over the services in the Horsham area used by 250-300 schoolchildren a day.

The children attend three secondary schools in Horsham - Millais, Tanbridge House and The Forest.

The services stopped on Monday after Goring-based Palaeobus suddenly ceased trading, the council said.

The council was alerted at the weekend that the company, which ran the buses on a commercial basis, would pull out.

Emergency meetings

"We have already started talking with other operators and I am confident that these buses will be back on the road on Tuesday," said Councillor Tex Pemberton.

The services are also used by the public.

Emergency meetings have been taking place at the council this week to discuss the problem.

Immediate action was taken so about 100 children who receive free school transport received an uninterrupted service.

Another Palaeobus service between Worthing and Ferring, which does not involve school transport, has already been taken over by Compass Travel.

Lt Col Pemberton said the issue of season tickets bought from Palaeobus was still being investigated to decide the best advice to give parents.

Nobody at the bus and coach operator was available for comment.