But transit officials, and Mayor of London Sadiq Khan, expressed concern that thousands of recent journeys involved unauthorized drivers uploading their photos to the accounts of other Uber drivers, allowing them to pick up passengers as if they were the booked driver. TfL also noted another failure with Uber's systems: Uber was allowing dismissed or suspended drivers to create Uber accounts and carry passengers.

"At this stage, TfL can't be confident that Uber has the robust processes in place to prevent another serious safety breach in the future," Khan said in a statement.

Uber said it had audited every driver in London over the last two months, and strengthened its processes. The company also said it would soon be introducing a new "facial matching process" to confirm the identity of drivers.

Daniel Ives, an analyst at Wedbush Securities, said he believes Uber was caught "flat footed" by the decision.

London is one of five global cities that accounted for nearly a quarter of Uber bookings in 2018, along with Los Angeles, New York City, San Francisco and São Paulo. Uber said recently that 3.5 million Londoners regularly use its app. It claims 45,000 drivers in the capital.

"If Uber ultimately was not able to operate in London it will be a 'seismic blow' to the company's European operations," Ives said, adding that the decision "could have a major ripple impact across other European cities."

Shorter licenses spanning months, not years, have become the norm for ride-hailing companies in London.

Ola, a powerhouse in India that's also expanding to new markets, also poses a threat.

— Charles Riley, Chris Liakos and Julia Horowitz contributed to this article.