The Government's decision to grant a further 3,100 taxi licences in Dublin would result in hundreds of taxi-drivers losing their homes as well as their jobs, their representative organisations warned last night.

However, the decision was welcomed by Fine Gael and Labour, which believed it would benefit commuters.

The National Taxi Drivers' Union of Ireland vice-president, Mr Vincent Kearns, said his members would take every legal avenue to prevent the licences being offered. The executives of a number of taxi organisations met last night to discuss their options.

Many new entrants to the business had re-mortgaged their homes or invested redundancy payments amounting to £70,000 to buy a plate, car, signs and insurance, Mr Kearns said.

The new licences meant they would be unable to meet their repayments, he warned.

"It is highly unlikely that many will be able to meet their commitments," the Irish Taxi Drivers' Federation president, Mr John Ussher, said.

The decision to grant so many licences meant taxi-driving would be turned from a full-time job into a part-time position, he said. "The effect is going to be devastating," he said. There were 1,974 full-time taxi-drivers before provision of 400 new licences in the last 18 months, and the announcement of a further 350 licences during the summer.

However, Fine Gael's traffic spokeswoman, Ms Olivia Mitchell, said Government inaction over the last couple of years meant it would be next Christmas before Dubliners saw any benefit from the extra taxis.