Passenger Transport Citibus operations manager Colin Abbis said the company had been trialling a commercial service from Waikouaiti to the Dunedin city area since the start of this year.
But in a letter to schools and parents last month, he said the service had to be stopped on August 30 because it was no longer financially viable.
''Unfortunately, the numbers of students using this service has reduced to the point that returns from fares no longer cover the substantial cost of providing this service,'' he wrote.
Mr Abbis thanked those who had supported the service and apologised for the inconvenience the withdrawal had caused.
He said alternative options were for pupils to use the Go Bus Palmerston to Dunedin service or the Ministry of Education-funded bus from Seacliff to Dunedin.
Only pupils who attend Logan Park High School - the closest to the northern services - and integrated schools are eligible for subsidised transport.
Dr Clark said the cuts were ''a tragic but inevitable outcome of poor decisions driven by a minister who either doesn't know or care about students living north of Dunedin''.
''The cost-cutting directive of the Ministry of Education is killing this service, not the students,'' he said.
The letter to parents offered one public transport option for pupils attending ineligible schools, which is to use the Go Bus service, he said.
''There is one service leaving Palmerston at 7am ... and arriving in Dunedin at 8.10am, which has most children arriving too early for the school day that typically starts at 8.50am.
''It is not good enough. There needs to be subsidised school buses to one terminus for all school pupils, regardless of which school they attend.''
Otago Boys' High School rector Clive Rennie and Otago Girls' High School principal Linda Miller have been vocal about the bus routes during the past year.
Both believed the ministry's criteria discriminated against them.
Mr Rennie said it disenfranchised parents and pupils from being able to choose which secondary school was right for them.
''This is all about saving money. It's very unfair for our pupils.''
Mr Rennie said both schools were investigating possible alternatives. Associate Education Minister Nikki Kaye said the bus service referred to by Dr Clark was not a ministry-funded service.
''The Ministry of Education is absolutely committed to supporting every eligible student to get to their nearest school wherever they are in New Zealand.
''The ministry currently spends approximately $175 million per annum on school transport assistance - this is to transport around 105,000 eligible students to and from school every school day.
''The Citibus service referred to by Dr Clark began operating earlier this year to transport ineligible students.
''It was a commercial service not funded by the ministry. The ministry played no role in a decision to no longer continue the service.''
Ms Kaye said any pupil who attended their nearest school and met eligibility guidelines should contact their local School Support Service manager to see what options were available.
