NSW Transport and Infrastructure said it had sent an officer to the Newcastle Taxis base after reports of the problems, which operators said caused major inconvenience for passengers from 8am to 10am.

The taxi network dispatch system runs off Telstra's mobile network. A Telstra spokesman confirmed it had an "outage" for about two hours, and apologised for the inconvenience.

But drivers and operators say they are worried about their security during the failures and whether their duress alarm system still operates.

They also say passengers have no idea when they ring for a taxi that they should expect delays, because no notification is placed on the company's automated phone system.

An operator told a state parliamentary inquiry into the NSW taxi industry last month that during another recent outage the alarms were not working, as there was no back-up system.

The department said it had written to Newcastle Taxis recently to advise it would conduct an audit of the company's compliance with network standards, including requirements for driver duress systems.

The department had received three complaints from taxi drivers yesterday.

Complaints have also been lodged with WorkCover, operators told The Herald yesterday.

Newcastle Taxi Operators Association president Garnett Cosgriff said morale among taxi operators was low and association members were "discussing their options".

A Newcastle Taxis spokeswoman said the company would co-operate with the audit and work with the department to address any issues.