A workers' co-operative has been awarded almost £150,000 to promote the use of vegetable oil as a fuel.

Blooming Futures, based at Old Shoreham Cement Works near Steyning, aims to build up a fleet of vehicles run on vegetable oil.

The non-profit-making organisation is developing the idea to support moves towards sustainable power amid concerns from environmentalists that natural power sources are running low.

Blooming Futures was on Monday highlighted among 36 projects across the country to benefit from £6.75 million of grants over the next three years from the Department for Environment, Food and Rural Affairs (Defra).

All of the projects to win cash from Defra's Environmental Action Fund have been chosen for their commitment to the environment.

Matthew Bulba, project manager at Blooming Futures, said it planned to convert 50 taxis in Sussex to vegetable oil next year.

He said: "We could convert taxis from a single company.

"Vegetable oil would make the company quite competitive as it is cheaper than diesel. But we don't want to spark off a taxi war so we might spread out the concept to ten or more taxi firms instead."

A small Sussex bus operator has expressed interest in having one of its vehicles converted.

Blooming Futures plans to promote the idea by touring the country on a converted double-deck bus.

Converting an engine for vegetable oil consumption costs about £1,200. Diesel costs about 82p per litre but new vegetable oil from a farmer costs just 62p per litre and waste vegetable oil only 40p a litre.

Mr Bulba said: "You will be able to go to Tesco, buy any type of vegetable oil, pour it into your tank and drive away.

"But it will be cheaper to buy it from a workers' co-operative and this leaves the potential open for people to buy their fuels from a wide range of local farmers.

"Trees and plants are not processed to cope with the additional pollutants of fossil fuels like diesel and petrol."

Blooming Futures has been offered £43,900 to fund its "bio-fleet" in 2005/06. In 2006/07 it will get £50,700 and £53,700 in 2007/08 .

The organisation had to demonstrate its objectives and a clear timescale to Defra and will now have to find match-funding.