Taxi reform bill passes in Victoria despite protests

A bill to reform Victoria's taxi industry has passed through the lower house as angry cabbies protested outside.

Taxi drivers protest outside Parliament house in Melbourne over Government deregulation plans for the Taxi industry. Source: AAP

The Andrews government's controversial taxi reform bill has passed the lower house of the Victorian Parliament just hours after angry cabbies tried to storm through the building's front doors.

Under the bill, which passed the lower house on Thursday afternoon, Uber will be legalised and existing taxi drivers compensated as the state creates a single registration system for cabs, hire cars and ride-sharing services.

Under the shake-up, all commercial passenger vehicle operators will be hit with the equivalent of a $2 levy per trip from 2018 to cover compensation costs.

The bill passed unamended "despite Liberal attempts to remove financial support for the existing taxi industry," the government said in a statement.

"The Liberal Party are hell bent on abandoning local, family-run taxi-businesses and giving multi-national companies free-reign to operate in Victoria without accreditation," Transport Minister Jacinta Allan said in a statement.

News of the bill passing followed a day of boiling tensions outside the state's parliament when taxi drivers protested over their compensation payouts and tried to storm the building.

The moved forced a lockdown by security.

Through the package, taxi licence holders will receive $100,000 for their first licence and $50,000 per licence for up to three more - despite some owners paying up to $500,000 per licence.