Taxi licence holders will be compensated for part of the cost of their plates after striking a late-night deal with the NSW government. 

The NSW Taxi Council accepted the state government's $905 million compensation package last night, after initially rejecting it.

The ABC understands a deal was finally struck when the council and the state government agreed compensation payouts would not be subject to capital gains tax.

It means licence holders in Sydney will be able to claim $150,000 per car, up to a maximum of six cars.

Regional licence holders will get between $40,000 and $195,000 with no cap on the number of cars, depending on the availability of ride-sharing apps in their area.

The deal aims to compensate taxi licence holders following the introduction of ride-sharing services, like Uber, into NSW in 2015.

NSW Taxi Council CEO Nick Abrahim said the deal ended years of uncertainty for the taxi industry. 

"It's been a challenge for many of these owners, particularly for those who have waited for over seven years," he said.

"But what we couldn't have is them waiting for another couple of years with uncertainty and not knowing what the potential outcome could be.

"The decision's been made to accept the offer with the intent that a bill gets presented through parliament ... so payment can land into the accounts of these licence owners sooner rather than later."

The NSW government intends to fund the compensation package with a 20-cent increase to the $1 levy charged to all rideshare and taxi passengers until 2030.

Transport Minister David Elliott on Sunday issued a 24-hour ultimatum to the taxi industry to accept the package, arguing it was the most generous compensation deal in Australia.

Mr Elliott said if the council did not accept the offer, it would be sent for independent assessment, where it would be compared with other similar packages around the world.

"There is a huge risk that our cabbies will get less compensation than what is on offer right now," Mr Elliott said yesterday.

The NSW Taxi Council yesterday rejected the offer, arguing licences cost $350,000 in 2015 when the industry was deregulated and ride-sharing companies were permitted to operate legally.

"They got these from the government and they still have significant loans against them," Taxi Council chief executive officer Martin Rogers said.

"Getting $150,000 still leaves them with a debt but no asset or income."

Labor Opposition leader Chris Minns said the compensation deal fell short of what the industry wanted.

"I understand it's not everything that they want," he said.

"But it does allow them to have a significant amount of money passed to them in compensation for ride sharing's proliferation in NSW."

The ABC has contacted Mr Elliott for comment.

Since 2015, ride-sharing company Uber has been joined in NSW by Ola, Didi and Shebah.