Uber has vowed to appeal after Transport for London said it will not be issued with a new licence and was “not fit and proper” to operate in the capital.

TfL said it took the decision on the grounds of “public safety and security implications”.

But Uber, which is used by 3.5 million people and 40,000 drivers in London, hit back, saying it would appeal and claiming the move “would show the world that, far from being open, London is closed to innovative companies”.

A union representing Uber drivers said its members face going bust as they rely on money from fares to pay for their cars.

Uber enables users to book cars using their smartphones and is available in more than 40 towns and cities across the UK.

Some 3.5 million passengers and 40,000 drivers use the app in London, but there had been growing speculation it could be banned in the city.

Opponents of the firm claim it causes gridlocked roads and does not do enough to regulate drivers.

Mayor of London Sadiq Khan said he wants London to be “at the forefront of innovation and new technology” but insisted that companies must “play by the rules”.

He went on: “Providing an innovative service must not be at the expense of customer safety and security.

“I fully support TfL’s decision – it would be wrong if TfL continued to license Uber if there is any way that this could pose a threat to Londoners’ safety and security.

“Any operator of private hire services in London needs to play by the rules.”

Uber’s general manager in London Tom Elvidge claimed users of its app “will be astounded by this decision”.

He said: “By wanting to ban our app from the capital, Transport for London and the mayor have caved in to a small number of people who want to restrict consumer choice.

“If this decision stands, it will put more than 40,000 licensed drivers out of work and deprive Londoners of a convenient and affordable form of transport.

Total number of licensed taxis and licensed private hire vehicles (PHVs) in London, 2007-2017(PA graphic)

“To defend the livelihoods of all those drivers, and the consumer choice of millions of Londoners who use our app, we intend to immediately challenge this in the courts.”

James Farrar, chairman of the Independent Workers’ Union of Great Britain’s United Private Hire Drivers branch, described the decision as a “devastating blow” for its members who “now face losing their job and being saddled with unmanageable vehicle-related debt”.

Last month, Uber was accused by police of allowing a driver who sexually assaulted a passenger to strike again by not reporting the attack, along with other serious crimes.

In a strongly-worded letter, Inspector Neil Billany of the Metropolitan Police’s taxi and private hire team suggested the company was putting concerns for its reputation over public safety.

Uber has overcome obstacles in a number of cities around the world.

It was banned in New Delhi, India, after a driver was accused of raping a female passenger, but the decision was later overturned.

The company pulled out of Austin, Texas, when it was told its drivers would have to undergo fingerprint background checks, but resumed services after the requirement was ended.