MELBOURNE (REUTERS) - Australia's New South Wales (NSW) on Thursday (Dec 17) declared ride-hailing service Uber legal in the country's most populous state, making it the second jurisdiction to give the US-based firm the green light as other areas continue to review its legality.

The state cabinet of NSW, which encompasses Sydney, found in favour of the service while also approving compensation measures for taxi drivers and announced the establishment of a new regulator. Uber welcomed the decision on an official account on social media service Twitter.

State Premier Mike Baird said taxi licence plate owners would receive unspecified compensation that would be funded jointly by the NSW government and a short-term levy on Uber's service. Baird didn't disclose details of the planned levy.

Australia's capital Canberra approved the service in October.

Despite regulatory uncertainty - an Uber driver in the southern state of Victoria was convicted earlier this month for operating a commercial vehicle without a licence - Uber has proved popular in Australia.

It says it has racked up more than one million registered users, in a country of just 24 million, despite opposition from the taxi industry and many local authorities.

Uber has grown aggressively worldwide with its matchmaker service linking up drivers and passengers. But a lack of regulation for the relatively new business model has brought it to the attention of authorities, stalling expansion.