A study he carried out into into council policies revealed that some met only the basic minimum requirements and others provided far more generous schemes.
"The money provided by the Scottish Office to education authorities in their budgets to fund school transport is not keeping pace with the real costs which education authorities are incurring on school transport," Mr Donohoe said.
"In Strathclyde Region, the council estimates it spent Pounds 3.7 million in 1994-95 on providing free school transport to 20,000 children not covered by the basic provision laid down in the Education (Scotland) Act 1980. It's time the Scottish Office looked again at the rules on the eligibility of school children for free transport."
Mr Donohoe said the Scottish Office should lower the current criteria for free travel.
"This would avoid some Scottish children under the age of eight having to walk up to four miles a day, and 20 miles a week, to attend their local school, " the Ayrshire MP continued.
Government regulations stipulate that transport should be free for all pupils under the age of eight who live more than two miles from their school (considered a reasonable walking distance) and for all other pupils who live more than three miles away.
Raymond Robertson, the Education Minister, has insisted that he has no intention of changing the rules.
Mr Donohoe's survey discovered that 70 per cent of Shetland pupils are entitled to free travel, 54 per cent in Orkney, 50 per cent in the Western Isles and 43 per cent in Dumfries and Galloway. Highland is next at 31 per cent, followed by Fife with 29 per cent, Grampian with 27 per cent and Central with 21 per cent.
In Strathclyde, 17 per cent of pupils receive free travel. Lothian and Tayside share the lowest figure of 13 per cent.
The Scottish average of 21 per cent has varied little over the past eight years.