Delhi's government has banned Uber after a passenger accused one of its drivers of rape, dealing a fresh blow to the reputation of online taxi service.

The controversial US-based company has come in for heavy criticism in India since a young company executive said she had been raped by an Uber driver previously accused of assault.

Local media reports say the company failed to do a background check on the 32-year-old, who had spent several months in jail on a separate rape charge before being acquitted in 2012.

Uber is banned immediately from operating in Delhi and the company will be blacklisted from providing transport services in future, a government statement said on Monday.

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It also said it had cancelled the licence and registration certificate of the driver, who was due in court in Delhi on Monday.

Police arrested him after tracking him to and arresting him on Sunday in his native Uttar Pradesh.

The incident has again raised the issue of women's safety in India, days before the second anniversary of a fatal gang-rape of a Delhi student that unleashed widespread outrage.

The victim of the latest alleged attack, an executive at a finance company who is in her mid-20s, dozed off in the taxi as she was returning home from dinner with a friend.

She has told police she woke to find the taxi parked in a secluded place where the driver assaulted and raped her, before dumping her near her home in north Delhi.

Although the driver threatened to kill her if she reported him, the woman took a photo of the car's number plate before alerting the authorities.

Delhi police said it appeared Uber had not followed the standard procedures for private cab services in the city.

Special commissioner Deepak Mishra said on Sunday early investigations showed GPS had not been installed in the taxi and police background checks were not conducted on the driver.

However, Uber said it had complied with city regulations. Background checks are "currently absent in (Delhi's) commercial transportation licensing programs," chief executive 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," the statement said.

"We will do everything ... to help bring this perpetrator to justice and to support the victim and her family in her recovery."

San Francisco-based Uber, which lets customers hail and pay for taxis or private vehicles via smartphones, has expanded at breakneck speed since it launched in 2009 and is now present in more than 200 cities across 45 countries.