WREXHAM County Borough Council is considering axing funding for pupils travelling to schools from outside their catchment area.
Under proposals put forward by the council's Children and Young Person's scrutiny committee, free school transport will only be provided to pupils attending their nearest school.
It has also been recommended that there should be no free school transport for children over the age of eight living less than three miles from their nearest school.
The proposals are intended to come into effect in 2008, and will only affect pupils attending a new school from September of that year.
Any savings made from the revised school transport policy will be redirected into schools to help support the council's priority of raising educational attainment.
The budget for school transport is nearly £4m while current transport costs per pupil are £171 per year.
No fewer than 785 pupils currently travel further than their nearest school.
Under the revised school transport policy, the council estimates it will save up to £300,000 from the plan.
Consultations will take place with schools likely to be affected and with parents of pupils prior to a final decision being reached.
It has been stressed by the council that parents are still able to choose which school their child attends.
Cllr Shân Wilkinson OBE, chair of the committee said: 'It is an issue of finance. Costs are escalating and it is going to get worse if we don't deal with things.
'The budget is like a bucket and there is a hole in the bottom of it.'
Cllr Richard Caldecott said: 'There is an opportunity to grasp some of this money and bring it back.'
A decision is expected to be reached by the Executive Board following the release of new guidelines on school capacities by the Welsh Assembly.