Hundreds of angry cab drivers and their families rallied outside Parliament on Saturday to protest the state government's taxi reforms, which include a controversial buyback scheme and plans to legalise ride-sharing service, Uber.

Traffic on Spring Street was diverted around the crowd for more than an hour as they chanted, "No deal!" and "Pay back, pay fair!"
 
Federal Labor MPs David Feeney and Peter Khalil both addressed protesters, pledging their support for taxi owners and promising to lobby their state colleagues for a better deal.

Mr Feeney said he was proud to fight alongside taxi drivers, who had been left "stranded" by the Andrews Government's plan to deregulate the industry.

"We know that we can have a constructive dialogue with this government but only united will they hear our voice," he told the crowd.

The member for Batman said the message to the state government was simple: "A fair go for working Australians who made an investment in this country in good faith. Anything else is unfair on you and it's unfair on the broader community."

Mr Khalil, the new federal member for Wills, said taxi drivers and their families had been coming to his office in tears, concerned about their future and asking for help.

"They looked into my eyes and they told me their stories and what I saw was deep pain, deep frustration, anxiety," he said. "David and I will be making further representations to the minister and to the government to get a fair package, a just package.

"Don't forget there are many state MPs who are also on your side and work very hard behind the scenes. They are making the case as well because we all seen the pain in your eyes, we all see our own families when we look at you, we all feel the same frustration and anger that you feel."

Under the scheme, taxi licences would by dumped and owners compensated up to $100,000 for their first licence and $50,000 for their second. The reform also includes a $2 levy on every taxi, Uber or hire car trip.

Greenvale taxi driver, Aytac Arman, said he bought a taxi licence two years ago for $290,000. "Now the government is offering to buy it back for $100,000 so we lost almost $200,000 in two years," he said.

"I know other people who paid half a million dollars for their license. It's not fair so we just won't give up."

Minister for Public Transport Jacinta Allan this week said the government was committed to supporting taxi licence holders and regulating ride-sharing

"The industry is changing – these reforms will ensure hard working Victorians aren't left behind," she said.