"We will also be warning passengers about the risks of using this service,"he said.

The service is currently only available to select users but is due to be launched publicly within weeks. Called"low cost"in Australia and"UberX"overseas,the company takes a 20 per cent cut from each fare.

The new option on the Uber smartphone app has infuriated the taxi industry,according to one Sydney driver,who said drivers were questioning the legality of the service and the fact it was largely unregulated.

Drivers have signed up by responding to Uber job ads on Seek,Facebook and Gumtree. The job ads stipulate that drivers wanting to be part of the low cost service must be"fun and outgoing",with"strong communication skills and great city knowledge",and"be willing to participate in a police background check".

This has to be dealt with before it gets out of hand.

NSW Taxi Council chief executive Roy Wakelin-King

One of the drivers Fairfax Media spoke to said she used to be a fast-food home delivery driver.

Uber's legal obligations are unclear,such as details of insurance and passenger injury compensation.

Uber Sydney general manager David Rohrsheim said every low cost ride was backed by third party liability insurance up to $US5 million per incident.

"With more options,consumers win,drivers win and Australia's cities win,"Mr Rohrsheim said.

Already some US states have banned or are attempting to ban similar businesses.

Some have allowed it though,but only after making Uber or other ridesharing services get a large amount of public liability insurance,which has resulted in the services adding $US1"safety"surcharges to rides.