Taxi drivers in Rushmoor were dealt a blow when they met councillors on Monday.
The licensing and general purposes committee turned down a request from Terry Dee, the local Taxi Trade Board (TTB) representative, to temporarily stop licensing new taxi drivers.
A total of 124 cabbies had signed a petition claiming there was insufficient demand to keep even existing licence holders in business.
But the committee, worried that the potential legal costs of justifying all the refusals resulting from a blanket ban would be too great, voted 7-4 in favour of maintaining the status quo.
Colin Rowlan, Rushmoor's assistant head of environmental health, explained the problem. "While we have sympathy with the financial pressures on taxi drivers there is a human rights issue and a legal cost issue.
"Each time the council's licence refusal is challenged it would have to conduct a needs survey to validate its decision, which would be expensive."
This cut little ice with Roger Watkins, a taxi driver in Rushmoor for 18 years.
He said: "Today was the result of a year's work and it's just been blown out of the water.
"All we wanted was some breathing space, some time for this trade to recover. The real snub is being gone against by fellow taxi driver in Waverley Cllr Choudhary."
Rushmoor has 166 hackney carriages — more per head than any adjoining borough. Mr Dee claimed a recent survey by the TTB showed that over an 18-hour period an average of 40% of them were standing idle.
He added: "A number of things are affecting our business: rises in fuel prices, local soldiers away in Iraq, the regeneration of Farnborough and Aldershot town centres and the economic climate generally."
Mr Watkins pointed out that taxi drivers now had to pay for £5million worth of public liability insurance cover, instead of £2m previously, and said many were tied into costly lease agreements which prevented them just switching to another job.
This combination of factors meant that despite working far longer hours his net income had fallen by 22% this year.
Cllr Mike Smith supported the taxi drivers, saying: "We do not need extra cabs in this borough."
And a report by the Office of Fair Trading on the regulation of taxis by local authorities may back them further — but it will not be published until August.
Cllr Keith Dibble suggested refusing new licences with a review of the decision when the report comes out, but Mr Rowlan advised that the council might be at risk of legal action from disgruntled applicants in the interim period.
And Cllr Diane Bedford proposed an alternative strategy of asking people not to apply until after the report comes out so the council can construct a policy in line with its recommendations.
But neither idea would have been enough for Mr Watkins, who said: "We need help now, not in three months' time.
"This is the worst state I have ever seen our business in — people are literally going out of business."