New Delhi has banned Uber's taxi service in the Indian capital after one of the drivers working with the firm allegedly raped a 25-year-old woman.

The US-based company has been blacklisted by the transport department over the alleged rape, which has sent shockwaves in New Delhi reviving memories of the December 2012 gang-rape incident.

"Keeping in view the violation and the horrific crime committed by the driver, the transport department has banned all activities relating to providing any transport service by the with immediate effect," read a statement from the government's transport department.

"The transport department has also blacklisted the company from providing any transport service in the National Capital Territory (NCT) of Delhi in future."

The taxi driver Shiv Kumar Yadav, 32, was arrested by the police two days after he allegedly raped a finance executive when she was travelling in his car.

Yadav had earlier faced sexual assault charges and spent seven months in jail in 2011.

Uber has been accused of failing to run background checks on its employees which critics say eventually led to this incident.

Uber's CEO Travis Kalanick said in a statement: "What happened over the weekend in New Delhi is horrific. Our entire team's hearts go out to the victim of this despicable crime. We will do everything, I repeat, everything to help bring this perpetrator to justice and to support the victim and her family in her recovery."

"We will work with the government to establish clear background checks currently absent in their commercial transportation licensing programmes."

Uber has been expanding in New Delhi and other cities rapidly in the last few months.

This is the first time Uber is facing a major crisis since it was launched in India a year ago.