The Government has ruled out any extra money for the bus pass scheme which allows over-60s free off-peak use of any bus in the country.
Some local councils have complained that they have been not getting enough money from central Government to run the scheme.
Transport Minister Sadiq Khan said the Government was now consulting on a new distribution of the £223 million which would be available for the scheme in 2010/11.
But the Department for Transport (DfT) said the total amount of money allocated would remain unchanged.
The concessionary travel scheme was extended in April 2008 so that senior citizens and the disabled could travel free in off-peak times not only on buses in their own area but throughout England.
The DfT said there had been concerns that some councils had received too much money and others not enough.
Under Wednesday's plan, about 200 councils would receive more money or would be unaffected by the revised distribution.
Mr Khan said: "The free bus pass is a popular policy giving 11 million older and disabled people greater freedom and independence. Around £1 billion is now spent in total on this scheme every year with over £200 million devoted to extending it to travel anywhere in England. Ensuring this extra money is distributed fairly and to where it's needed most is critical to the continued success of the scheme.
"We have listened to concerns raised by some councils about the way the grant has been allocated and also assessed last year's spending to ensure that we are getting it right. Today we are publishing a proposed revised grant distribution for 2010/11 which seeks to better match the pattern of costs being incurred.
"The changes we are proposing build on the success of the national bus concession and will not in any way affect older or disabled bus users who use the scheme. I now look forward to hearing views from authorities and hope to publish the final grant distribution early in the new year."
