Radio Taxis Group Ltd, which operates a fleet of 3,000 cabs across the capital, had previously committed to making every fare-paying journey carbon neutral by buying offsets.
But today, the company took its efforts to reduce its carbon footprint further by pledging to run its vehicles on a 30% biodiesel blend, reducing tailpipe CO2 emissions by 7%, particulate emissions by almost 5% and also cutting the output of polluting NOx family of gases and carbon monoxide.
The blend also improves fuel efficiency, allowing the vehicles do improve the mileage per gallon by almost 10%.
By the company's calculations, the move will save up to 5,220 tonnes of CO2 per year, roughly equivalent to taking 300 cars off the road.
At the London launch of the pledge today city Mayor Ken Livingstone praised the company for taking voluntary steps to improve its environmental performance.
'London already has the best taxi service in the world, and I am working with the taxi trade to make it the cleanest,' he said.
'New regulations introduced this year, mean that the capital's 20,000 black cabs must now meet strict emissions standards, making vehicles less polluting to help improve London's air quality.
'I congratulate Radio Taxis' commitment to go a step further and introduce a greener fuel in their vehicles. By tackling carbon emissions in this way, Radio Taxis are demonstrating that forward-thinking businesses have an important role to play in tackling climate change and I hope that other London businesses will take their lead.'
Andrew Herbert, managing director of Radio Taxis said: 'Radio Taxis Group was the world's first ground transport fleet to go carbon neutral.
'But today we recognise that offset is not enough, the challenge is to deliver real and significant cuts in greenhouse gas emissions.
'The roll-out of this new biofuel means that we will be driving down CO2 emissions, driving down particulate emissions and, with fuel economy gains, driving down costs for our drivers.'
Radio Taxis Group also today unveiled its high visibility reflector stickers carried on the front window screen and designed to allow passengers the option to spot, and hail, a greener taxi.
The company will continue to offset the emissions of every passenger journey.