The new service -- which creates Palestinian-only and Israeli-only buses -- is aimed at easing the congestion of existing bus lines used by residents of the West Bank, Ynetnews.com reported.
One unidentified bus driver said the ministry should find another solution as the decision will create criticism and calls of "apartheid" and "racism."
Another bus driver said while bus drivers are not allowed to refuse service or order anyone to get off buses, they were informed by the ministry that Palestinians will "be asked to board their own buses," the website said.
A ministry statement said the decision was made "with the knowledge and complete agreement of the Palestinians." The buses will transport West Bank Palestinian workers to Israel via the Eyal crossing near Qalqilya, the website said.
The ministry said the decision to launch the new service came after complaints that existing bus lines serving both Israelis and Palestinians in the West Bank were too crowded and fears that Palestinian passengers could pose a security risk.