County Hall chiefs are examining the implications of new Government cuts in funding for free school travel.
Lancashire is one of the worst-hit authorities in the country after learning its allocation has been slashed by more than £150,000 for the next financial year.
The county was given £748,900 by Whitehall this year to support children from low income families to help them attend schools further than two miles walking distance from home.
But the county council has now been told the figure for 2015/16 will be £597,248 - a 20 per cent drop of £151,652.
County councillor Matthew Tomlinson, cabinet member for children, young people and schools, said: “We only found out about the reduction in funding on Wednesday.
“We will now have to consider the implications the reduction will have before the change comes into effect in April.”
The government has slashed school travel funding by a total of £6m, forcing local authorities to consider making cuts elsewhere.
The allocation helps children aged eight and under to attend schools further than two miles walking distance, or three miles for those between eight and 16.
A DfE spokesperson said: “We expect there to be no loss to eligible children – figures have been calculated from data collected in the spring.”