A major Australian law firm is launching a class action against Uber, in what it claims will be "the largest" lawsuit in the nation's history.

Thousands of taxi and hire-car drivers, operators and licence owners across New South Wales, Victoria, Queensland and Western Australia are expected to join Maurice Blackburn's class action.

The case will be filed in the Victorian Supreme Court later this year or early next year.

The key argument will be that Uber, which initially operated "illegally" from 2014, caused the taxi and hire-car industry to lose significant business.

The first jurisdiction in Australia to legalise Uber was the Australian Capital Territory in October 2015.

Since then, every state and territory has followed — most recently, the Northern Territory in early July.

They also blame the global rideshare company for flooding the market with unregulated drivers and causing the value of taxi licences to plunge from $500,000 to about $50,000.

"I've been across the country talking to taxi drivers and they all tell me the same story: their business declined when Uber arrived," said Elizabeth O'Shea, a senior lawyer at Maurice Blackburn.

"Uber got an unfair advantage because they didn't play by the rules.

"These people [taxi drivers] have worked hard, abided by the rules, done the right thing and are being punished because of it."

'Paying off a licence I no longer own'

State governments differed in their responses to legalisation of Uber and "the digital revolution", as former NSW premier Mike Baird put it.

NSW established a $250 million "industry adjustment package" to compensate taxi drivers in December 2015.

The Victorian Labor government, in August 2016, announced an overhaul of the taxi industry, offering to buy back licences at a small fraction of their worth.

That decision had a significant impact on the livelihood of taxi drivers like Rod Barton, who has joined the class action.

"I'm currently paying off a licence that I no longer own, that is bigger than most people's mortgages," he said.

"I should be planning retirement with my grandkids at the farm, but that's been taken away from me."

Mr Barton used to own a countryside property, but has since been forced to sell it and move into a rental property.

Ms O'Shea said the lawsuit could be worth "hundreds of millions of dollars", with about 1,200 plaintiffs having signed up in Victoria so far.

Although she is confident about the case, Ms O'Shea is expecting Uber — which has been sued in several lawsuits globally — to defend the matter vigorously.

Last year, the rideshare company lost a case in the Federal Court that ruled its drivers were not exempt from paying GST.

Uber also launched a legal battle against Transport for London after it was banned from operating in the British capital.

The company was also involved in a failed lawsuit that resulted in the European Union's top court deciding that Uber was subject to taxi regulations, and was not merely digital intermediary between drivers and customers.

Its food delivery business Uber Eats was also being investigated by the Australian Competition and Consumer Commission for allegedly forcing restaurant owners to sign up to oppressive conditions.