THE future of free Hampshire-wide bus travel for pensioners was today under threat after the government sided with a bus company demanding more cash from councils.

The Department for Transport has confirmed it is telling councils they must take another look at the number of passengers using the free passes and review their payments to Stagecoach South.

Taxpayers could now be left to pick up the bill unless authorities decide to reduce the amount of free travel they offer their residents.

The decision in the first of three separate appeals launched by Hampshire's largest bus operators was last night branded "ridiculous" by one charity for the elderly.

The news comes less than a month after an announcement in the Queen's Speech that pensioners will be able to travel anywhere in England for free from 2008.

Appeals by First and Wilts & Dorset remain outstanding, but 11 of Hampshire's 13 councils could now be forced to reassess their offer of providing travel beyond their authority boundaries.

Winchester City Council's cabinet portfolio holder for planning and transport, Councillor Keith Wood, said he felt it was unlikely his council would reduce its service, as long as the money could be found to pay for it.

"The scheme is very popular and the take-up has been huge," he said.

"Any additional cost is going to hit the council taxpayers because unless the government is willing to fund this, it is a liability on the city council.

"The government is going to revamp the scheme in 2008 anyway, so I wouldn't have thought we would reduce the offer if we can afford it."

Chris Perry, director of Age Concern Hampshire, was astonished by the decision.

He said: "It seems ridiculous. I'm surprised given the announcement in the Queen's Speech.

"It seems a nonsense to go back on the service when in a matter of months it is due to be extended."

Stagecoach South managing director, Andrew Dyer, said the company is giving the decision a "cautious welcome".

"There are some points in principle that have clearly been found in our favour," he told the Daily Echo.

"But we've got some further questions to ask which don't appear to be clear from the initial decision."

Mr Dyer was delighted the inspector backed Stagecoach's beliefs that companies can make profits on investments made towards the running of the scheme, such as buying new buses.

It was also stated that councils should not allocate funding on a fixed basis.

"How can they know whether there's enough money in it to reimburse operators or not?" he said.

"The inspector found that (that system) is fundamentally unfair, which we are very pleased about."