A “revolutionary” electronic travel card scheme that could see the end of paper tickets across Devon and Cornwall is now a step closer after a £3 million Government funding boost.

The region-wide project will bring in “touch in, touch out” cards similar to the Oyster system used on public transport in London.

Different tickets will be loaded onto a smart card at travel shops, online and through mobile phones, with passengers then simply tapping it onto a reader onboard the bus.

The Plymouth-based company behind the project has ambitious plans to expand in the future, integrating other forms of transport and council services.

Ultimately it is envisaged people will be able to travel to school or work, visit a leisure centre, borrow a book from the library and then take a train or bus home, without ever needing to carry cash.

The Integrated Transport Smartcard Organisation (ITSO) ticketing scheme is one of three bids in the Westcountry that were this week granted more than £12 million of Government investment.

A £5 million grant towards a Devon County Council project to encourage commuters out of their cars was also given the go ahead.

The bid aims to “nudge” drivers to change their travel behaviour through a package of measures, including improvements to encourage walking and cycling. It will target the areas in and around Exeter, Exmouth, Newton Abbot, Kingsteignton and Totnes.

The authority says it wants employees to “rethink their daily commute” and be aware that people are trying to spend less on travel during the recession.

Traffic management on the most congested routes will attempt to give priority to pedestrians, cyclists and public transport users.

A project called Plymouth Connect was also successful, being granted £4.33 million to improve walking, cycling and public transport links in the city.

The funds will be used to complete the east-west walking and cycling route across the city and restore the iconic Laira Railway Bridge to create a new pedestrian and cycle link.

The South West’s £9.4 million smart-ticketing scheme was launched in October last year by Transport minister Norman Baker.

In addition to the £2.98 million awarded this week, the remaining £6 million will come from local contributions including £3.5 million from bus operators in the South West and £1.1 million provided by councils in the region.

The project will be delivered through South West Smart Applications Ltd (SWSAL), a new not-for-profit company hosted within the Institute of Sustainability Solution Research (ISSR) at Plymouth University.

Plymouth City Council said the £3 million grant, awarded by the Department for Transport’s Local Sustainable Transport Fund, was “crucial” to the scheme.

It will be used to deliver smart-ticketing equipment on all 3,400 registered local bus services in the South West, and provide the back office equipment to support this.

Andrew Seedhouse, director of transport for the ISSR at Plymouth University and chairman of SWSAL, said: “This funding award is a great start for our new research institute and great news for SWSAL.

“I am personally delighted to be able to work closely with the city council and SWSAL members in delivering the project, and making South West England the first fully smart region for local bus travel in England.”

The funding forms part of £155 million of Government investment in 39 projects nationwide. Transport Minister Norman Baker said: “All the winning schemes have one thing in common – they will help build strong local economies while addressing the urgent challenge of climate change.

“We have empowered local authorities to create packages of sustainable initiatives that are tailored for their local areas, and we believe this is only the beginning.”