Bus priority at traffic signals is a growing area of co-operative transport system applications. Interest in bus priority continues to grow as the Cities pay more attention to the needs of buses to provide fast, frequent and reliable services thus contributing to a sustainable transport system. Bus priority at traffic signals is particularly favoured at places where road space is limited and traffic signal density is high. With increasing use of Automatic Vehicle Location (AVL) systems, it is now possible to provide ‘differential’ priority, where different levels of priority can be awarded to buses at traffic signals according to chosen criteria (e.g. to improve regularity). At present, common strategies are based on the comparison of the time headway of a bus with the scheduled headway. However, this paper shows that greater regularity benefits could be achieved through a strategy where priority for a bus is based not only on its own headway, but also the headway of the bus behind. This paper demonstrates the benefits of this on a theoretical basis and quantifies the benefits from simulation modeling of a high frequency bus route. Such a strategy provides an opportunity to exploit the more detailed location information available from the growing number of AVL-based systems for buses being implemented around the world.