West Australian Premier Colin Barnett has said he would have "no hesitation" using the ride sharing service Uber.

The launch of Uber in Perth last year sparked anger among the taxi industry, which has complained about an uneven regulatory system.

The Department of Transport is preparing a discussion paper on the future of the industry, including how to deal with new services in the market.

Earlier this month, tender documents revealed the State Government planned to use private investigators to help it crack down on Uber.

Mr Barnett said he would not have a problem using the Uber service himself.

"I'd have no hesitation using Uber if I wished to, but I'd use other normal taxis as well," he said.

He told 720 ABC Perth the State Government could not ignore Uber's popularity and would look at legislative changes to legalise it.

"Uber doesn't operate within the law, we all know that," he said.

"The reality that I have to face and the Transport Minister has to face is people are using it.

"So we would like to somehow bring Uber within the law ... maybe it means them adjusting, maybe it means the law adjusting, maybe it means the taxi industry adjusting."

He would not be drawn on which service he considered to be safer, but said Uber needed to change some of its security procedures.

"I think if Uber is to continue to operate here they do have meet safety requirements," Mr Barnett said.

"But the public will choose, and I know a lot of people do have confidence in the Uber service, particularly younger people."

Mr Barnett again flagged phasing out taxi plates, which have traded for hundreds of thousands of dollars, and indicated the government would not compensate drivers.

"I've got a lot of sympathy for drivers, I don't think they're highly paid at all and they work long and difficult hours and often face safety issues for themselves," he said.

"[But] people pay exorbitant amounts of money for the right to have a taxi plate, they buy it off each other privately.

"The only way to get rid of it is to phase it out progressively and slowly."