China on Thursday announced new rules governing ridesharing services, making clear for the first time that they are now legal in a giant market where US-based Uber is at loggerheads with local rival Didi Chuxing.

China has become the world's largest online car-hailing market, vice transport minister Liu Xiaoming told a briefing.

"The legitimacy of internet ride-booking services are clarified" in new regulations on taxi industry reforms and regulations on car-hailing apps, Liu said.

Didi Chuxing said it was "the first time" any government had legalised online car-booking services at the national level, hailing the move as a "milestone".

Beijing's stance on the sector had been ambivalent because while the apps have won public support, they threaten old-style taxis -- which often generate income for local authorities -- and have been met with protests by cab drivers.

The services have been banned in some cities.

Liu said the new rules will support the development of online car-booking platforms, adding that private cars were encouraged to provide ridesharing services to "promote the sharing economy" and "ease traffic jams in cities and reduce air pollution".

Under the rules, the provinces where ridesharing apps are registered can issue them with a licence valid nationwide.

Unlike traditional taxis, ridesharing cars are not subject to an eight-year service limit but can operate until they have accumulated 600,000 kilometres (372,822 miles), apparently addressing concerns of part-time drivers.

"Didi will make an earnest effort to comply with the new rules and adopt its corresponding standards," Didi Chuxing said in a statement, adding it will apply for the licences "soon".

US giant Uber, which says it operates in more than 60 Chinese cities, also welcomed the regulations.

They "send a clear message of support for ridesharing and the benefits that it offers riders, drivers, and cities", it said in a statement.

"Uber China is regulation-ready, and we look forward to working with policy makers around the country to put these regulations into practice."

Both firms have spent vast sums on subsidies for both drivers and passengers as they battle for market share in the country -- a practice that could potentially be limited by the new rules that say platforms will be forbidden to operate below cost.

-'Operate everywhere'-

Didi and Uber have attracted billions in investment, even while operating on uncertain legal footing.

Didi, which claims almost 90 percent of the China ride-hailing market, said last month that it had recently raised $7.3 billion -- $1 billion of which came from Apple -- in one of the world's largest private equity financing rounds.

Worth an estimated $50 billion, Uber has become one of the world's most valuable startups as it has expanded to more than 50 countries, but it has faced regulatory hurdles and protests from established taxi operators in most locations where it has launched.

Fu Weigang, executive president of the Shanghai-based think-tank SIFL Institute and an advisor to China's transport ministry during discussions over the new rules, called the document "a good policy overall".

"The online car-hailing industry used to be in a grey area and now it has been recognised by law. They can now apply to operate everywhere," he told AFP.