Similar to London Underground commuters who are able to access WiFi from some stations, cab passengers will have 15 minutes of free internet access after watching a 15 second advert.
The CabWiFi network received approval by Transport for London last Thursday after start-up company Eyetease spent two years on their bid for the novel idea.
With free access to the internet and their own login, cab drivers will be able to offset the often high cost of data charges incurred using taxi apps, which some drivers claim have doubled their phone bills in recent months.
Eyetease CEO Richard Corbett said: ‘With dwell times averaging 15 minutes in the back of a taxi, what better way to pass the time than to use your laptop, tablet, book reader or phone with guilt free internet access.
‘Tourists and business travellers can now access their emails, talk on Skype or surf the web without the fear of being hit with high data roaming charges when they return home.’
The system, manufactured in Latvia, works by turning 3G and 4G mobile connectivity into a WiFi hotspot for passengers and takes just two minutes to install.
To access the service, an ‘ads for access’ model has been used, similar to popular sites such as Spotify and Youtube.
The company said they were in ‘progressed conversations with several major consumer brands’ including a global credit card company and a leading mobile phone manufacturer to sponsor the roll out of the network.
There are some 22,000 black cabs in London and according to The Wall Street Journal Mr Corbett said: ‘We already have 500 cabs signed up with no marketing.’
On the Underground, there are 92 tube stations so far that have WiFi after the service was put in place in time for the Olympics this year.
The Virgin Media WiFi network is free until the end of January 2013 when full internet access will only be available free to Virgin customers. Other commuters will have to purchase WiFi passes.
Passengers are able to access emails and websites and stream videos while they are stand on platforms or escalators.
They will lose the connection when the train goes through a tunnel, but will automatically reconnect at the next stop.
Almost half of all internet users use a mobile phone to connect to the internet, according to National Statistics figures from August 2011.
The number of wireless hotspots has almost doubled from 2010 to 2011 to 4.9million users.