The Australian Capital Territory is the first jurisdiction in the world to legalise UberX.
The ride-sharing taxi service will be able to operate without fear of fines and licence suspensions from October 30 when reformed legislation comes into effect.
The legislation will also gradually reduce taxi licence fees from $20,000 to $10,000 from October 30 and then $5000 in 12 months.
As for traditional accredited taxi drivers, the reform will allow taxi and hire car drivers to also find passengers through Uber and similar apps.
Chief Minister Andrew Barr said the territory's size allowed them to be nimble.
"It represents our approach to innovation and I hope it sends a signal to innovators that Canberra is a good place to start up in," Barr said.
"We're large enough to make it worthwhile for innovators but small enough to be able to move quickly to take advantage of digital advancements and get a regulatory outcome in pretty quick time frames."
Barr said Uber had indicated they were the first jurisdiction in thew world to work through necessary regulatory issues.
"We've had a lot of calls from states and territories interested on seeing the details and we're happy to share," Barr said.
Federal Senator David Leyonhjelm told The Huffington Post Australia the broader ACT would benefit from this legislation change while other states and territories would lag behind.
“It proves competitive federalism is alive and well -- the states and territories compete with each other and the ones that adapt the most effectively benefit from it and those that don't, learn from it.
“The ACT says Uber is welcome and no doubt the ACT will benefit from that by having a better transport system. Victoria is moving down the same path whereas NSW is going all authoritarian.
“NSW will pay the price for that with a taxi system that is more expensive, with worse service, and a black market operating.”
Leyonhjelm also said he wanted to see barriers removed to allow federal politicians to use Uber.
“If politicians can use Uber it will save taxpayer money because it is often cheaper than traditional taxis,” Leyonhjelm said.
“At the moment, we use Cabcharge, which can’t be used with Uber.”
He said Canberra's tendency to swell in population around sitting weeks and university semesters meant the current taxi service had been stretched for some time.
"Sometimes, you just can't get a taxi," Leyonhjelm said.
Uber was launched out of Silicon Valley in the U.S. in 2009, based on the idea that everyday people could use their own cars as a taxi service.
Drivers and customers are linked through a mobile app with operations in 58 countries.
Despite this, it is only compatible with the law in Germany and the Philippines, and is actively banned in most countries. In Australia, legislation is left to individual states and territories.