Melbourne taxi drivers have staged two demonstrations in protest against the state government's scheme to buy back their taxi licences.

Up to 200 taxis blocked the Bolte Bridge as part of the protest at peak hour this morning, causing major delays for commuters.

Video from the 9NEWS helicopter showed cars banked up behind the cabs as they crawled at speeds of around 10km/h.

Congestion had eased around 10am, VicTraffic advised.

This afternoon, drivers flooded the streets near state parliament to demand full licence compensation.

Many drivers, clad in bright yellow t-shirts, carried signs emblazoned with the message: “Fair go for hardwork in Victoria”.

The Victorian government wants to deregulate the taxi industry by abolishing taxi licences and introducing a single registration for taxis, hire cars and ride-share services like Uber.

Yellow cabs and protesters in yellow t-shirts lined Spring Street. (AAP)

Taxi drivers voiced anger over the state government's license buy-back scheme. (AAP)

It proposes to compensate taxi licence holders by paying $100,000 for their first licence and $50,000 for up to three others.

However, some licences cost up to $500,000 and many holders fear the buy-back scheme will send them broke.

Victorian Taxi and Hire Car Families (VTHCF) spokeswoman Sandy Spanos said drivers were staging protests to highlight the plight of some 3500 Victorian families who will suffer under the deal.

“We need you to come to the party and pay us out. We are mums and dads, grandmas and grandpas and we don't want to be on welfare," Ms Spanos said.

Taxi driver George Goutzioulis said he would fight for proper compensation of his family's three licences, with the current deal set to refund just 20 percent of their investment

Early morning chaos for commuters. (9NEWS)

Taxi drivers held a similar protest on Saturday. (9NEWS)

Taxi drivers gather at Todd Road in Port Melbourne. (9NEWS/Dougal Beatty)

We bought under the impression it was industry regulated but now that's been ripped away from us all," he said.

Protesters also called for Transport Minister Jacinta Allen to resign over the issue.

VTHCF warned today’s protest will be one of many disruptions put on by drivers until a total compensation deal is reached.

Opposition Leader Matthew Guy said the government needed to sit down with taxi drivers and negotiate a fair deal because drivers needed certainty.

“We must start at what drivers say their licence plate is worth and what the government says they're worth and then have a discussion."