Consumer groups have called on other states and territories to follow the ACT's lead and work with Uber, despite the city's taxi association describing reforms as a betrayal of the industry.
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Uber's long anticipated launch in Canberra will be regulated from October 30, as the ACT government moves to introduce new regulation and cut the license fees charged to taxi firms.
The ACT will be the first jurisdiction in Australia to regulate Uber's activities. Ride-sharing drivers will be allowed to take smartphone application and phone bookings but only taxis will be allowed to pick up passengers from ranks and on the street.
Criminal history and background checks will be required for all drivers, and all taxi, hire cars and ride-share vehicles will all undergo safety inspections. Compulsory third party and property insurance will be required for all ride-sharing operators.
After new legislation is passed, driver accreditation requirements will come into force and taxis and ride-sharing services regulated under new transport booking services rules. Some Uber drivers could be eligible for workers compensation.
The new regulations will mean that the ACT is the first capital in the world to introduce a framework for ride-sharing to operate legally before such services have even started operating.
The Australian Automobile Association has welcomed the regulation of Uber and hoped it would increase competition and provide customers with more affordable transport options.
"The ACT's reforms also strike a balance between traditional transport providers and supporting the emergence of new technologies," chief executive Michael Bradley said.
Uber spokesman Caspar Nixon said the company welcomed sensible and safe ride-sharing regulations.
"Canberra will become the first capital city in the world to introduce specific ride-sharing regulations before Uber's entry into the market, leading the way for other state and territory governments to follow suit and open up choice and opportunity for all Australians."
He said the ACT government's progressive approach came after a transparent review and "open and constructive dialogue".
"The ACT government has not only answered the demands from thousands of Canberrans for economic opportunities and more reliable and affordable transport, but, through their decision, they have also recognised the rights of all Australians to choose how they move around their cities," Mr Nixon said.
Canberra Taxi Industry Association executive director Tony Bryce said he was still considering the proposals but was disappointed by the government's approach.
"We went into a taxi review with the understanding that it would result in a level playing field but what it appears to have been is not so much a taxi review, but a government project to open the door for Uber," he said.
"So far, there doesn't seem to be anything in relation to the value of perpetual taxi plates which is an ongoing concern for us.
"It has certainly taken away some of the costs and regulations for taxi drivers but it is still not level with Uber in a number of areas."
Unions ACT secretary Alex White welcomed workers compensation coverage for Uber drivers. He said operators of taxis and ride-sharing cars should be provided with minimum hourly rates.
"This is one of the first steps, creating a proper licensing systems for drivers and transport providers. It opens the door for further reform in that area," he said.
"What is not positive is that Uber has a track record around the world of being hostile to worker's rights. This is an opportunity for governments around Australia to look again at the taxi industry."
Mr White said further scrutiny would be needed for ride-sharing after it begins in Canberra.
