Thousands of vulnerable bus users across East Anglia could lose vital lifelines if a key transport grant is scrapped by the new coalition government.

Transport experts have issued dire warnings of isolation for the elderly, people on low income and rural dwellers without cars if the government chooses to axe the £400m-plus a year bus service operators grant.

The impact of the grant withdrawal could be as severe as the infamous Beeching cuts to the railways in the 1960s, warn transport lobbyists, causing:

10pc of routes lost

An increase of 10pc in fares

Thousands of industry job losses

Ministers have responded by saying no decision has yet been made and accused the bus industry of fuelling “unnecessary speculation”.

But transport minister Norman Baker has admitted that “preserving everything in aspic isn't the right solution”.

The bus service operators grant rebates bus operators for the fuel duty they pay in running local registered bus services, keeping operating costs down. It also covers many rural, school and “socially important” services.

A coalition of pro-public transport groups including local authorities, bus operators, transport campaigners and unions have written to transport secretary Philip Hammond to urge him not to cut the grant as part of the current spending review, which is being driven by the wider economic difficulties.

They fear a decision could be made in weeks to cut the grant.

Letters have been sent to all 533 MPs in England, while an early day motion supporting retention of the grant has been laid down in parliament.

Shaun Spiers, chief executive at the Campaign to Protect Rural England, said: “Cutting the bus grant may look like a quick way to slash spending, but the social, environmental and economic costs to the countryside would be huge in the long term.

“Those unable to drive could be forced to move out of rural areas or face isolation, while those living car-free in towns may be cut off from the countryside.

“Closed pubs and post offices would be joined by derelict bus shelters, the final straw for the vibrancy of many villages.”

Mid Norfolk MP George Freeman said he was very concerned at any proposals to reduce bus services in rural areas.

“Much of rural Norfolk suffers seriously from problems of marginality and inaccessibility to services, affecting young and old particularly,” said Mr Freeman.

“Clearly the crisis in the public finances that the coalition government has inherited will mean cuts, but the policy is that those cuts should, wherever possible, be in the back office rather than on the front line.

“I would want to see evidence of substantial cuts in bureaucracy before rural bus services in Norfolk are further cut.”

Stephen Joseph, executive director of Campaign for Better Transport, said: “Scrapping the bus service operators grant could do for Britain's buses today what Beeching did for the UK rail network.

“In many areas, it could tip buses into a spiral of decline with fares rises, falling patronage and service cuts, all with impacts on some of the poorest in society.

“It would trap people into dependence on cars and add to local traffic problems.

“Pensioners could find themselves with free bus passes but no buses on which to use them.”

Neil Scales, chairman of Passenger Transport Executive Group, said: “Outside London the bus is the main form of public transport - and is also relied upon the most by low-income households.

“If we want to reduce carbon from transport and give jobless households the means to access work, then we need to ensure bus networks are maintained.”

Transport minister Norman Baker replied to concerns by saying: “Preserving everything in aspic isn't the right solution to ensure a fair deal for either the taxpayer or the fare payer.

“Bus subsidy, along with all other areas of transport expenditure, will be considered as part of the spending review, but any change will be to help the bus industry to grow.

“However, no decisions have been taken to abolish the grant and the bus industry should wait and see what proposals we come up with before causing unnecessary speculation.”

The letter to the government and MPs warns that scrapping the grant would have damaging and wide-ranging consequences for local communities, public transport services, low-income groups, the UK economy and the environment.

Cuts would be “most acute” in rural areas and on lower-used evening and weekend services.

Up to 10pc of the 170,000 people employed in the bus industry could lose their jobs while reduced investment would also result in cuts in new buses, with consequences for UK manufacturers and suppliers.

A previous study for the government by the Commission for Integrated Transport found that every £1 invested in the bus service operators grant provided between £3 and £5 of wider benefits.