Commuters travelling on the Arriva number 3 service evacuated the bus after a fire broke out in its engine compartment.
As the driver, taking passengers from Cannock to Walsall, via Brownhills, attempted to put the fire out using the on-board foam extinguisher, a passer by came to his aid, armed with her own powder extinguisher.
No one was hurt in the incident, which happened at around 9.30am at the Wilkin Estate in Brownhills.
Arriva's Cannock depot manager, David Brent said: "The driver had used the on-board foam extinguisher after the fire started.
"A lady living nearby came out with a powder extinguisher and completed the job.
"We are grateful to her for her help and quick thinking."
Fire crews were called but only as a precaution, as the fire had been put out by the driver and the woman before spreading.
Arriva spokesperson Richard Lakin said: "Around nine passengers from the bus caught the next available Arriva service.
"The fire brigade had been called as a safety precaution.
"We would like to formally say thank you to the lady."
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