Private transport companies have warned that they will have to pull out of the free travel scheme unless the government increases its funding.

They say they cannot afford to accept free passes from pensioners at the rates the government is currently paying.

The government pays private bus companies €77 million a year to carry passengers with free passes but the companies say that is no longer enough to cover their costs.

The government insists it is not planning to scrap the scheme but says the rates are under review.

Transport Minister Leo Varadkar admits there are difficulties with how the scheme operates at present.

"The number of free passes have increased - it's now over a million if you include companion passes, for example - whereas the the budget and the money allocated to transport companies has not increased and new transport companies can't get into the scheme" he said.

"But the review that's being done at the moment is with a view to modernising the scheme - it's not about taking it away, that's not our agenda at all as a government" he added.

Kevin Traynor is from the Coach Travel and Transport Council of Ireland.

But groups representing the elderly are demanding an immediate payout to private bus companies to save the scheme.

Gerard Scully from Age Action Ireland says rural Ireland could be devastated if private companies pull out of the scheme.