In an attempt to implement gauge mediation in string theory, we study string effective supergravity models of supersymmetry breaking, containing anomalous gauge factors. We discuss subtleties related to gauge invariance and the stabilization of the Green-Schwarz moduli, which set non-trivial constraints on the transmission of supersymmetry breaking to MSSM via gauge interactions. Given those constraints, it is difficult to obtain the dominance of gauge mediation over gravity mediation. Furthermore, generically the gauge contributions to soft terms contain additional non-standard terms coming from D-term contributions. Motivated by this, we study the phenomenology of recently proposed hybrid models, where gravity and gauge mediations compete at the GUT scale, and show that such a scenario can respect WMAP constraints and would be easily testable at LHC.