Chief Minister Jon Stanhope said $4.5million would be allocated in next month's budget to improve congestion on the capital's main thoroughfare.

''In the upcoming budget we will fund a design study on the initial set-up of developing a bus-only or transit lane on Northbourne Avenue,'' Mr Stanhope said. ''At this stage we are giving serious consideration to moving the on-road cycle paths on to the pathways, but we would reconstruct the pathways double their width if that is the decision we take.''

He said the funding was part of a sustainable transport action plan, Transport for Canberra, to make bus travel more attractive to commuters.

Currently more than 50,000 people travel on Northbourne Avenue every day.

''The possibilities are closing one of the lanes [going] either way and turning them into a transit lane. The other is to build a dedicated bus lane down the median and adopt a tidal arrangement that buses travel south in the morning and north in the evening.''

Mr Stanhope said Canberrans would be consulted before work began.

''We haven't decided on a final way forward. What we are signalling is that we intend to bite the bullet over the next one to three years ... [to] provide significantly enhanced public transport measures along Northbourne Avenue,'' Mr Stanhope said.

''I don't believe at the moment there is a way around a dedicated lane for buses, whether we build [it] on-road or whether we construct a new bus-only lane on the median.

''At this stage we have funded the design of an off-road dual shared cycleway footpath with a view to then determining how best to achieve either a single busway or an on road transit lane.''