The drivers staged various forms of protests, besieging main squares, deliberately snarling traffic, blocking access to several airports and organizing go-slow drives, local media reported.

In Rome, the drivers descended on central Piazza Venezia, the city center of Rome, soon after midnight after taxi unions abandoned the negotiating table.

They remained there throughout the night and forced local authorities to close the square off to traffic.

Some 60 other taxis took part in a go-slow drive from the city's main airport to the city and back again, causing further problems.

The protests were replicated in Naples, Turin, Genoa and Milan, where drivers blocked access to the city airport.

Italian Economic Development Minister who drew up the bill contested by the drivers, said that "they (the taxi drivers) do not own the city."

The matter of controversy is a government decree that intends to liberalize taxi licensing and break the virtual monopoly status of local taxi federations.

This decree orders municipal administrations to increase the number of taxi licenses issued and give out temporary permits during predictably busy periods.

One of the most controversial aspects is a measure which would have allowed private firms to enter the sector by acquiring licenses and then hiring their own drivers.

Taxi licenses in Rome are regarded as private property by their holders, who trade them on when they retire or pass them on to their children. The practice has created a grey market in which the cost of a permit can reach as high as 200,000 euros (about 240,000 U.S. dollars).

Italy's 40,000-strong fleet of taxis is the smallest in Europe. According to official statistics, there are 2.1 taxis per thousand inhabitants in Rome compared to 8.3 in London and 9.9 in Barcellona.

The number of taxis operating in Rome is 5,820, compared to more than 61,000 in London, almost 43,000 in New York and 17,000 in Paris, the report said.

Complaints from residents and tourists over the difficulty in finding taxis during peak hours and at night have shot up in recent years, with taxi drivers accused of deliberately restricting the number of cars available in order to safeguard their earnings and the values of their licenses.