The figure will represent around a third of the company's expenditure this year and represents a 5% increase on 2006.

The Sunday Tribune has learned that the company even operates a joint venture with one member of the Coach Tourism and Transport Council of Ireland (CTTC), whose complaint kicked off the investigation.

McGeehan Coaches, an operator in Donegal, has been jointly running the DonegalDublin route with Bus Eireann since November 2005.

A spokeswoman for Bus Eireann said that this was an example of the company's attempts to "spread the work around. We're quite reliant on private operators and they're quite reliant on us."

She said that private operators generally tended to be employed at peak times and on school routes. "It gives us the flexibility to hire in extra vehicles when necessary and not have to maintain as large a fleet than we otherwise would."

The chief executive of the CTTC, Cora Collins, downplayed the significance of the private hire business its members receive from Bus Eireann. "They certainly wouldn't be our largest customer, " she said.

Collins said that it was unfair to focus on the contracts, particularly as it ignored the wider issues at stake. "Should we allow the government to break European law just because some of our members are getting contracts?"

She said that the CTTC was concerned that Bus Eireann and Dublin Bus were using their government subventions to compete with private operators on profitable routes, rather than subsidise unprofitable ones.

"Giving the grant to the CIE board to spend as they see fit as the government currently does is illegal, " she said. "It creates a situation where private operators invest in buses, start routes and then end up saturated with competition from state companies."

Collins said that Bus Eireann's private hire business represented part of an attempt by CIE to "force an industry double the size of Dublin Bus and Bus Eireann into a subservient role".

She said, however, that her members would continue to seek private hire work from the company.