The plan is to use 'street cars' from the Newbridge site
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Bath's buses are to benefit from a £54m package of transport improvements announced by the government.
A "rapid transit" service is planned from an expanded Newbridge park-and-ride using multi-carriage buses running on a former railway line.
Ten bus routes in the city will be updated to "showcase" standard with more frequent services.
Transport union Unite said the news was "good news for Bath, the local environment and the bus industry."
Spokesman Malcolm Green, said: "From the union's perspective the more people who use the buses in and around Bath the stronger the industry becomes. That can only be of benefit to our members."
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PROPOSED CHANGES
A rapid transit route from Newbridge to Lambridge
A new park-and-ride at Lambridge
Extended park-and-ride for an extra 2,000 parking spaces at Newbridge, Lansdown and Odd Down
Bristol to Bath Cycleway extended to the city centre
Bus priority measures on other routes
Better bus stops and new shelters with real time information
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The plan also promises further improvements to make it safer and easier for pedestrians to get around the centre.
The bus rapid transit system is proposed to run from the Newbridge park-and-ride, via Bath western riverside to the city centre and then to a new park-and-ride site at Lambridge.
It will link to the new bus station and Bath railway station interchange which forms part of the Southgate development, which is set to be completed in 2009, using street car-style vehicles.
A Bath and North East Somerset (Banes) council spokesman said it was "fantastic news" for the area.
"Traffic levels are predicted to increase between now and 2010. By working towards introducing these improvements Banes is taking a positive step to limiting this increase."
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