London taxi regulator Transport for London (Tfl) has concluded that Silicon Valley start-up Uber is operating within the law.

The taxi service, now valued at $18.2 billion (£10.6 billion), was targeted by thousands of black cab drivers last month who took to the streets in protest, claiming Uber was operating unlawfully by using a smartphone app to work out fares when its illegal for private vehicles to be fitted with taximeters.

In a statement released today, TfL, the body that regulates and licenses taxi and private hire vehicles in the capital, said:  “In relation to the way Uber operates in London, TfL is satisfied that based upon our understanding of the relationship between the passenger and Uber London, and between Uber London and Uber BV, registered in Holland, that it is operating lawfully under the terms of the 1998 PHV(L) Act.”

TfL said its position is “supported by legal advice”, and stressed that there are “no grounds to take action against Uber London Ltd, Uber BV or Uber drivers under s.2 of the 1998 Act.”

The travel body added: “TfL’s view is that smart phones that transmit location information (based on GPS data) between vehicles and operators, have no operational or physical connection with the vehicles, and receive information about fares which are calculated remotely from the vehicle, are not taximeters within the meaning of the legislation.”

TfL, which is overseen by Mayor of London Boris Johnson, initially referred the case to the High Court when the Licensed Taxi Drivers Association (LTDA), which helped to organise the protest, complained about Uber. However, it is understood that the High Court has been unable to look at the case because there are a number of other “criminal proceedings” going on that involve certain Uber drivers.