Campaigners have called Oxford City Council's decision to record all conversations in taxis "a staggering invasion of privacy".
By April 2015 it will be mandatory for all of the city's 600 plus cabs to have cameras fitted to record passengers.
The council said the cameras would run continuously, but only view footage relating to police matters would be reviewed.
Big Brother Watch said it was "a total disregard for civil liberties".
Video and audio
The civil liberties campaign group intends to complain to the Information Commissioner's Office (ICO) over the scheme, which includes both black cabs and private-hire vehicles.
An ICO spokeswoman said the plans were "highly intrusive and unlikely to be justified".
She added: "Licensing authorities must take account of people's right to privacy when deciding whether to impose CCTV as a licence condition for taxi drivers."
A council spokeswoman said the "video and audio would run all the time within the vehicle".
She said police would only locate footage, stored on a CCTV hard drive for 28 days, if it was needed for a police investigation.
She added: "The risk of intrusion into private conversations has to be balanced against the interests of public safety, both of passengers and drivers."
Big Brother Watch director Nick Pickles said: "Given that one rail route to Witney [David Cameron's constituency] is through Oxford, we'll be letting the prime minister know that his staff might want to avoid using Oxford cabs."
The necessary equipment must be installed by taxi drivers licensed for the first time by 6 April 2012. A panic button must also be fitted.
Cabs already registered will have until April 2015 to get the kit fitted, the council said.