A suspected explosion in a gas-powered bus prompted public bus drivers to park their vehicles instead of getting on the road, creating commotion among Sydney passengers at peak hour.

Fearing the risk of another explosion, drivers are refusing to drive 700 gas-powered buses after learning about a video footage of a bus in fire reportedly after an explosion.

The Australian Associated Press reported that Transport Minister Gladys Berejiklian confirmed a Mercedes gas bus caught fire in Hillsdale in July and that the office of transport safety was investigating. However, she dismissed the drivers' safety concerns, calling their action illegal.

"The buses have been deemed safe to operate... Passenger safety is paramount and State Transit would never let a bus leave a depot if it felt it was unsafe," Ms. Berejiklian said in a statement.

For its part, the NSW Rail, Tram and Bus union slammed the government for allegedly keeping mum about the incident.

The union's decision Tuesday was rather spontaneous.

Sydney's bus fleet totals 2500 vehicles and the action affects five depots located at Ryde, Kingsgrove, Leichhardt, Waverley and Port Botany, the AAP reported.

The bus caught fire on July 29 and was soon fully ablaze. A passerby caught it on video and delivered the footage to RBTU on Tuesday.

The president of the RBTU's bus and tram division Gary Way said drivers would refuse to drive gas-powered buses until the union had heard from the State Transit Authority (STA).

"Luckily the driver got off before it all went up. They're unsafe. Until they can demonstrate that they are safe ... we're not going to drive them," Way told AAP.

According to the AAP, Berejiklian said the STA was seeking urgent action in the NSW Industrial Relations Commission in a hearing scheduled for 5pm on Tuesday.