Derbyshire County Council has announced that the money it gives to Dial-a-Bus - currently £689,000 - will be withdrawn from October 2017.
Around 1,300 people with mobility problems rely on the doorstep service every month to go shopping and visit friends.
Derbyshire pensioners’ plea to save ‘lifeline’ Dial-a-Bus serviceOver the next five years, the Labour-led council needs to cut its budget by at least £109million because of Tory Government austerity.
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Councillor Dean Collins, cabinet member for highways, transport and infrastructure, said this meant 'difficult decisions have to be made'.
Meanwhile, the council has agreed to rethink controversial proposals to cut all funding for bus services.
Around 85 per cent of the county's bus services are operated by companies which set the routes, timetables and fares. The council has no say in how these are run.
But around 15 per cent - 144 services - are funded by the council. Typically these are early morning, evening, Sunday and rural services and some routes serving housing estates. They carry around 4.2 million passengers a year.
Following a consultation earlier this year, councillors have now announced they will reconsider their original plans and approve £3m funding. This is down from the current spend of just over £5m but will continue to fund some subsidised services.
Coun Collins said: "We had a huge response to the consultation - and it's clear that going ahead with our original proposals for cuts with the inevitable loss of bus services would have a significant impact on the day to day lives of many Derbyshire residents.
"We've listened to people's concerns and as a result we've thought long and hard about what we can fund in the future.
"We recognise that getting out and about is a top priority, especially for younger and older people to retain their independence."
As part of the consultation, the council received more than 4,200 questionnaires which included nearly 25,000 individual comments - as well as around 200 letters, emails and telephone calls.
Feedback showed that 92 per cent of respondents said they disagreed with the proposal to withdraw funding for subsidised bus services.