The driver was taking Irrawang High School students to Medowie when the wheels careered off the Hunter Valley Bus Company vehicle just before he was to begin a sweeping left hand turn near Finnan Park.

Police said the bus's axles began to dig into the roadway as one of the tyres flew into Grahamstown Dam and the other careered into bush.

The bus driver was able to drop back gears and safely bring the vehicle to a stop in the middle of Richardson Road.

No one was injured.

"I believe that the driver used great skill in keeping the bus from losing control,'' acting Sergeant David Hanna said.

"With 80 school children on board, I hate to think what could have happened.''

The roadway was closed for two hours and all children were taken home on other buses.

Police have reported the incident to the Roads and Traffic Authority's heavy vehicle inspectors and have issued the vehicle with a defect label.