Parents sending their children to Catholic and Church of England schools in Bath and north east Somerset will have to pay for transport in the future after the council voted to gradually withdraw its subsidy.
The local authority has taken action to reduce its £258,000-a-year bill for helping primary and secondary pupils get to and from religious schools.
Last night cabinet members voted unanimously in favour of a phased withdrawal of funding over seven years, going against the recommendation of the council's early years, children and youth policy development and scrutiny panel.
This will kick in from September 2014, but in a concession to families, siblings of those already at faith schools will still get the financial support.
The changes will not affect low income families as the council has a statutory duty to provide transport for them if the faith school is between two and 15 miles away.
Councillor Dine Romero, cabinet member for early years, children and youth, thanked everybody for giving their views during the discussions and consultation on the matter, but said the council could not afford to keep the funding.
She said: "In an ideal world and in the interests of absolute fairness I would want all children going to school free of charge.
"But these are times of austerity and we need to think really carefully about which discretionary services we need to continue."
The meeting at the Guildhall was packed with local families affected by the decision and Raymond Friel, the head teacher of St Gregory's Catholic College and St Mark's CE School, warned about the possible impact any reduction in subsidy could have on the local school system.
He said that if less Catholic children from further afield attended St Gregory's then these spaces would be filled by non-religious Bath pupils.
This could then lead to "unplanned and unpopular" closures of other, smaller schools.
Speaking after the meeting Mr Friel said the cabinet's decision was disappointing.
He said: "I understand the pressures they are under to make drastic cuts but I am not convinced that this move will realise any substantial savings for the council.
"I will be asking the council to monitor this closely in the months ahead.
"I do appreciate the concession to siblings which was agreed and I'm grateful that we continue to work with B&NES in the administration of our transport. They have always been very helpful."
He added: "I also must acknowledge the support of the council for our new sixth form. Without their investment and support we would not have a sixth form.
"However, the reality is that many Catholic families from 2014 will find it too expensive to send their children to St Gregory's at full cost.
"There will be more places available to Bath children at St Gregory's and despite what was said at the meeting, I am convinced this will have a knock-on effect on other Bath schools."
Councillor Gabriel Batt (Con, Bathavon North) also spoke at the meeting, urging the cabinet to continue the subsidy.
He said: "When the Liberal Democrat party was formed shortly after St Gregory's was created, they said at that time that all children should travel to school by bus and not car and that school transport should be free.
"I would like to think that this is still the policy of the Liberal Democrat party.
"Members of the cabinet, society should not discriminate against minorities."
Under the current system parents pay £300 a year towards the £1,000 average cost for a bus or taxi seat for their first child.
They then get a 50 per cent discount for second and third children, and then there is no charge at all for any children after that.
Families entitled to free school meals or maximum working tax credit do not have to contribute to the cost.
