More detail has been given on a plan to build a $160 million bus tunnel between Hackney Road and the Adelaide CBD.

Promised by Labor ahead of last year's South Australian election, the 500-metre tunnel is proposed between Hackney and Rundle roads, with the South Australian Government promising it would cut up to seven minutes off travel times for commuters.

A previous plan to extend O-Bahn bus services was scrapped when the Federal Government withdrew funding in 2011.

Transport Minister Stephen Mullighan said about 450 jobs would be created during the tunnel's construction.

He said the O-Bahn already was used by more than 31,000 commuters on weekdays.

Premier Jay Weatherill said a planned closure of the existing Rundle Road and realigning it further south would improve the east parklands, an area heavily used for events including the current Fringe festival.

"By closing Rundle Road we are able to return more than 3,000 square metres of land to Rundle Park," he said.

Mr Mullighan said about 150 car parking spaces in Rundle Road could go.

"What we're looking at doing is returning about half of that along the East Terrace roadways," he said.

"There is some parallel parking on the eastern side of East Terrace next to the parklands, but there is very little, if any, car parking on the western side close to the businesses.

"What we're able to do with this scheme is return some of those car parks."

But the State Opposition has questioned how the Government will pay for its revised plans.

Opposition spokeswoman Vickie Chapman said she doubted the Government would be able to deliver the project within its $160 million budget.

"These figures are now more rubbery than a tyre, we need to have some accurate assessment of about what the costing of this project is, particularly as today's announcement confirms it as a much different project," she said.

"We've gone from a tunnel, to a tunnel plus a new road, plus the rehabilitation of and removal of an old road, so how does that stack up?"

Bus tunnel will help combat congestion: RAA

Charles Mountain of motoring organisation RAA said it was good to know efforts were progressing to deal with one of Adelaide's congestion hot spots.

Buses would emerge from the tunnel and head into Grenfell Street. ( Supplied: Dept of Transport )

"Our initial review suggests it should improve traffic flow in the area because it will remove buses from East Terrace and Botanic Road," he said.

"Creating a more direct path for the O-Bahn to take into the city will also help to improve public transport by taking those buses off the road.

"It should also assist traffic flow on North Terrace and East Terrace, particularly during peak periods."



Former Transport Department chief executive officer Rod Hook said he was not sure if the latest plan would save commuters any more time than the previous plan to extend O-Bahn bus services.

"They're talking about a seven-minute saving for the average daily commute," he said.

"If that's worded carefully, it's probably three-and-a-half minutes per trip."

Mr Hook said the plan would be better for buses, but might not help motorists.

"I have difficulty seeing where the real benefits are for vehicles and freight," he said.

The plan is open for public feedback until the end of March and the Government said there would be a series of consultation meetings and information sessions.