A blitz by safety inspectors on two Transdev bus depots found 33 defective buses, with 12 in such poor condition they were ordered off the road for urgent repairs.

Victoria's transport safety watchdog, Transport Safety Victoria, said it was the highest number of defective buses it had ever taken off the road in a blitz.

Transdev, which operates one-third of Melbourne's bus network under a $1.7 billion contract with the state government, has been forced to hire a mix of buses and coaches from other companies to plug holes in its timetables.

It has also reported scores of cancelled services in recent days due to "operational issues".

Transport Safety Victoria said it would increase its inspection regime of Transdev's fleet of buses until it is satisfied the company's maintenance standards are adequate.

It is currently inspecting about 40 buses a day for potential safety problems.

"We are working with Transdev to make sure the immediate safety issues are effectively managed and their safety systems are sufficiently robust to ensure the ongoing safety of their bus services," said Shaun Rodenburg, the acting director of bus safety at Transport Safety Victoria.

Defects included engine and transmission faults, fluid and air leaks, loose fitting panels and suspension faults.

The high number of potentially dangerous faults earned a rebuke from Public Transport Minister Jacinta Allan.

"This was not acceptable and we're taking this situation very seriously, as the safety of people travelling on buses is our highest priority," Ms Allan said.

Public Transport Victoria is reviewing the maintenance failures "so we understand the root cause of this issue and stop it from happening again", Ms Allan said.

Manningham resident Stuart McKenzie is a regular passenger on Transdev's DART buses between Doncaster and the city, and said he was concerned to hear that many of the company's buses are unroadworthy.

"When the DART buses were introduced a few years ago they looked quite swish for a while but they don't look as good now, and the graffiti problem has made things worse, but I'm not too fussed about that as long as they are safe and functional," Mr McKenzie said.

Transdev's seven-year contract with the state government is unique among Melbourne bus operators.

It is performance-based, with bonuses and penalties for meeting punctuality and reliability targets, similar to Metro Trains and Yarra Trams.

The decision to put a third of Melbourne's bus routes out to competitive tender was made by Public Transport Victoria in 2013, and was meant to usher in a new improved service level.

However, Transdev has largely failed to meet its performance targets.

Fairfax Media this year revealed using freedom-of-information laws that Transdev had never met its contractual monthly punctuality target of 85 per cent and has overseen an annual decline in those using buses of tens of thousands on key routes.

Under the terms of its contract the company is meant to grow bus passenger numbers on its routes.

Transdev said it was working to get the defective buses back in service, and had repaired four buses already.

Transdev chief executive Warwick Horsley briefed staff that VicRoads inspected its Doncaster and Fitzroy North depots last week and found 33 defective buses.

"All impacted buses have been scheduled for urgent repair. We expect this process to take up to two weeks to complete, with a gradual return to service of around two-three buses per day," he wrote.

"The work now begins to learn from this experience, embed updated procedures and where necessary and ultimately ensure that the events of this week are not repeated."

The Andrews government is contemplating opening up Melbourne's other bus contracts to more competition to improve service standards.