But the government was forced to drop these charges this week after what it called "evidentiary issues". In a statement on Thursday, RMS Director of Safety and Compliance Peter Wells said drivers of ride-sharing services like UberX were breaking the law, "it's as simple as that". "They are not regulated, not authorised and are not subject to ongoing criminal checks like taxi, hire car and bus drivers are," Mr Wells said. "It is only a matter of time before an incident occurs and a driver faces the possible denial of insurance cover, leading to substantial financial loss." Uber welcomed the dropping of charges.

"No one should be penalised for providing safe and reliable rides in their city," a statement from the company said. "The people of Sydney are voting with their feet - almost 4000 Sydneysiders are now earning a flexible income on the Uber platform and hundreds of thousands are choosing Uber to get around their city," the company said. But the chief executive of the Taxi Council, Roy Wakelin-King, said: "If Uber thinks that this is a win, then they are deluded. This fight has a long way to go." The NSW Transport Minister has announced a review of taxis and ride-sharing services. Both Uber and the taxi industry were positive about the prospect of the review, with significant uncertainty running through the industry.

NSW Labor leader Luke Foley has endorsed the Uber model. Opposition transport spokesman Ryan Park said: "The Baird government's policy on ride-sharing is a shambles: its current case against Uber drivers has fallen apart, and yet it's still left the door open to prosecution. "The government needs to regulate the industry to make it safe and fair, or risk staying stuck in the slow lane and getting left behind by the hundreds of thousands of Sydneysiders already using the service." Uber does not breach the Passenger Transport Act in facilitating its UberX platform, in which drivers take lifts through their regular cars. But the drivers do, because they are not accredited as either taxis or hire cars.

Mr Wells said enforcement against UberX drivers would be targeted at known hot spots and during random roadside tests. A Transport for NSW spokesman would not explain the issues with the prosecution. "To ensure future prosecutions are not jeopardised we cannot comment further," the spokesman said. In a release issued on Thursday night, Uber said no court in Australia had "held that any UberX driver partner has committed any offence under any passenger transport laws, including the NSW Passenger Transport Act". The Uber statement said a magistrate "at the Downing Centre Local Court recently ruled that NSW Roads and Maritime Services did not have authority to prosecute the alleged offences under the Passenger Transport Act". "About a week after that ruling, we were notified that RMS would be withdrawing all of its remaining prosecutions against uberX partners in NSW," Uber said.

"These matters should never have proceeded to court and have been a waste of taxpayers' money. Had costs been sought against the RMS, this would have meant even further waste."