Darlington'S taxi drivers could be fined up to £1,000 if they refuse to carry guide, hearing and assistance dogs accompanying disabled passengers.
Government legislation being introduced from Saturday requires all licensed Hackney carriage owners to carry such animals at no additional charge.
Under the Disability Discrimination Act 1995, they could be fined heavily if they fail to comply with the legislation.
Taxi drivers have already been written to by council chiefs, who have issued guidance on the carriage of dogs.
Eventually, Darlington Borough Council hopes to extend the legislation to private hire vehicles.
Barry Pearson, the council's licensing manager, said it had raised the issue at a taxi liaison meeting and received a positive response from drivers.
Taxi drivers can exempt themselves from the legislation on medical grounds by requesting an exemption certificate.
Darlington council already has a bylaw which require it that guide dogs have to be carried by Hackney carriage drivers, but fines are limited.
Former councillor Norma Town, who is registered as blind, said she had been involved in an incident a number of years ago when she was turned away from a taxi with her dog.
She welcomed the new legislation, saying: "We have to travel about like anyone else, and if you cannot get in a taxi with your guide dog you have a problem."
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