But it won’t yet say whether it will accept the money on the table to stop fares from being introduced for good.

The decision - reached following talks between parliamentary secretary for the Illawarra Gareth Ward and NSW Premier Gladys Berejiklian on Tuesday afternoon - means the shuttle will remain a free service until June 30.

However, its future beyond that date remains unclear.

“The government will continue the free subsidy of the Gong Shuttle until June 30, an extension on the original arrangements which were set in place for January 29,” Mr Ward told the Mercury.  

Transport for NSW revealed last month it would introduce standard Opal fares on the city-loop bus from January 29.

The move prompted the University of Wollongong and Wollongong City Council to devise a joint funding arrangement to keep the service free.

The arrangement, which is yet to be accepted by Transport for NSW, wouldn’t kick in until July 1. That meant there was a 153-day gap between January 29, when the fares were due to come into effect, and the start of the new financial year.

Mr Ward confirmed the government would plug the funding gap, but wouldn’t say if the government would take up the uni-council offer.

“We will now negotiate with the university and council to make sure the sums all add up, but I can confirm there will be no shortfall and residents of the region will not be left out of pocket due to council’s decision not to start its subsidy until 1 July,” he said.

Questioned about the Gong Shuttle’s operating costs, the Liberal MP said “we’ve always said that the bus was around $3 million”.

“What I’ve always committed to was a 75 per cent contribution, the council and the university will have to put their 12.5 per cent [each] of the 25 per cent ... we’ll have to work out what that figure is and they’ll have to meet it,” he said.

Asked whether the combined $700,000 annual contribution flagged by the university and the council ($350,000 each) would be the final figure required, Mr Ward said: “I’ve never said that it was.”

“I have said consistently the government will cover 75 per cent of the cost and that if the university and the council want to stump up 12.5 per cent [each], look these are details we’ll negotiate,” he said.

“One of the reasons why I argued so strongly to continue the free subsidy until the end of the financial year is so these matters can be worked out.”

The Mercury understands Transport Minister Andrew Constance did not want the government to cover the shortfall.

A spokesman said Transport for NSW would “review the merits of any reasonable proposal” when asked about the uni-council funding arrangement.