A union is calling for Go Bus' iwi owners to step in as a stalemate between the company and drivers threatens to continue indefinitely.

City bus services ground to a halt for a time on Monday as drivers blockaded Hamilton's transport centre in response to a lockout of union drivers.

Picket lines were formed on Anglesea St in central Hamilton and at the Higgins Rd depot on Monday morning, blocking buses and forcing thousands of commuters to look for another way to work or school.

CHRISTEL YARDLEY/STUFF About 50 Waikato bus strike descends into lockout. Bus drivers protested outside Waikato Regional Council on Monday morning.

The Waikato Regional Council building on Grey St was also targeted.

READ MORE: Waikato bus strike descends into lockout

The escalation in the long running industrial dispute erupted when First Union said its members wouldn't collect fares on Waikato's urban routes, prompting the company to lock out workers and operate reduced services.

CHRISTEL YARDLEY/STUFF Charlie Wharekawa protests for better wages and working conditions for bus drivers outside the Waikato Regional Council building.

First Union divisional secretary Jared Abbott said it was time for Go Bus' owners, Tainui and Ngāi Tahu to get involved in the dispute.

"In an industrial dispute like this that escalates to this level, it's time for the owners to step in and take some responsibility for what is going on."

He said they had tried to leave the owners out of the dispute.

CHRISTEL YARDLEY/STUFF Waikato bus strike descends into lockout. Bus drivers protested outside Waikato Regional Council on Monday morning. Richard Brown

"Unfortunately for a lot of our members, their whakapapa is Tainui and Ngāi Tahu and they have been pushing us to bring them into the dispute.

"When you lock workers out for seeking the living wage and at the same time, you're an iwi claiming to be a living wage iwi, it seems completely hypocritical."

He said the the protesting would continue as long as workers continued to be locked out.

PHILLIPA YALDEN Bus drivers form a hard picket line in front of buses at the Transport Centre on Monday morning.

"Until they lift the lockout notice, we'll continue to picket.

"I think it's fair to say that it's our intent to be disruptive."

Go Bus chief operating officer Nigel Piper said at this stage, the lockout will continue indefinitely.

"Regrettably there will be more disruption."

The move not to collect fares would have put Go Bus in breach of their contract with the Waikato Regional Council and posed a health and safety risk to non-union drivers who were collecting fares.

It was also necessary for the negotiations to conclude, Piper said.

"We have been at it for 20 months...we just had to bring this to a conclusion.

"If the union accepted the company's latest offer then we can move forward and the lockout would finish."

On Monday morning more than 50 union drivers were holding their ground at both entrances to the Transport Centre, stopping a stream of buses from leaving.

First Union organiser Jax Oldham called the lockout notice "extreme". According to notice conditions, drivers cannot go back to work unless they sign the terms of settlement.

"Which is pretty much sign your life away for less than you can survive on."

The company was currently offering a 1.9 per cent increase but Oldham said that was "1.9 per cent on stuff-all".

Drivers were seeking the living wage of $20.55 as a starting point. She said school bus drivers were currently on $17.80.

"The company is being greedy not giving them a wage rise so why give them the money.

"We're making sure they can't go out and get the fares."

Police were called to deal with the crowd on Monday but said the picket line was causing no issues.

Buses in the city were running on a Saturday schedule.

"We won't give up and we won't sign over for less than what we can survive off."

Oldham said union members would be back on the picket line on Tuesday.

'We'll keep going all day every day until we get that living wage."

Oldham said that picketing would likely be at the Council building in the morning and could also include the Transport Centre.

Piper said the living wage demand would be a wage increase of up to 16.2 per cent on top of the 6.7 per cent already paid earlier this year.

It was a financial decision that must involve local government and NZTA, which funded their services and set passenger fares.

"We have made it absolutely clear to the union that Go Bus is not in a financial position to meet their living wage demand at this time, but we are more than happy to work with them in presenting the case to the authorities that fund the bus services."

The Waikato Regional Council said in a statement that the action at the Go Bus depot and Transport Centre caused significant delays to its services.

"This will have impacted on our passengers across the city and in particular students, many of whom were due to sit NCEA and university exams today."

Tainui Group Holdings chief executive Chris Joblin said Go Bus' management had settled collective agreements with four other unions over the past 20 months.

"We are encouraging further dialogue between Go Bus, the First Union and relevant councils to resolve this current matter."

Ngāi Tahu have been approached for comment.