Uber is accusing the government of hypocrisy for saying it wants innovative technological growth while making it difficult for the smart phone-based driver service to expand.
The government has recommended Uber operate under the same rules as taxis.
Associate Transport Minister Craig Foss has released a consultation paper outlining five options, following a review into regulations for small passenger services, including taxis, shuttles, dial-a-driver and ridesharing apps.
The government's preferred option is to introduce a single class system where all services would compete under the same rules.
Uber would effectively be forced to become an approved transport operator, be responsible for deeming its drivers fit and proper, and ensure vehicle safety.
Uber's Australia and New Zealand director of policy, Brad Kitschke, said the move undermined the government's talk about innovation.
"It's not enough for the government to talk about innovation, they actually really need to walk the walk."
Mr Kitschke said the company was very disappointed its concerns had not been heard.
"When the review was announced in January, the minister said that the review would be completed by mid-2015. It's now the end of 2015 and it's disappointing to be advised by the government that it's unlikely to be any real change until this time next year."
But Mr Foss said the government is supportive of innovative technology, but the right rules needed to be put in place for the services.
He said passengers should feel safe and informed no matter what service they are using.
Taxi Federation executive director Roger Heale said a new single class system was sensible and would be a step closer to achieving a level playing field.
But Heale said he was still seeking clarification on the details, such on in-vehicle security cameras.
"Our view is obviously that cameras are fundamental; the government has a different view.
"We can understand the rationale behind what they are doing, we'll get an exemption as will any other at-base provide that can provide the information that is required by the government."
Uber marked its one-millionth ride in New Zealand in September. It has run the service in Auckland and Wellington for more than a year and was looking to expand to Christchurch and other centres.
The company has not so far been available for comment on the recommendations.
Read the consultation paper here.
The review identified five "broad approaches":
- Status quo - modified
- Reinforce separate markets for taxis and private hire services, with separate regulatory burdens
- Create a new single class system in which drivers are responsible for safety and compliance (reduced regulatory burden)
- Create a new single class system in which operators have responsibility for safety and compliance (reduced regulatory burden)
- Apply existing taxi requirements to all operators (higher regulatory burden in new single class system)
Submissions on the consultation paper close on 12 February.