The cap will halt new ride-hailing vehicle licenses for one year while the council investigates how to mitigate issues that came with the influx of companies like Uber and Lyft, mostly related to congestion and driver wages.
Minorities also praise the services because they say yellow cab drivers often refuse to pick them up or drive to their neighborhoods.
And Josh Gold, a spokesman for Uber, told Tthe Times in a statement that the cap "will threaten one of the few reliable transportation options while doing nothing to fix the subways or ease congestion".
Regulatory changes in New York City, Uber's largest U.S. market, could provide a model for other cities eager to rein in ridesharing firms that have increased congestion even as they've revolutionized transportation.
Michael Jools from the Australian Taxi Drivers Association said the stricter controls would help to alleviate congestion.
Mayor Bill de Blasio and Corey Johnson, the City Council speaker, say the bill will help cut down on the amount of congestion on the streets of NY. But critics said it will make it harder, and more expensive, to get around. It comes in the wake of reports about the declining price of taxi medallions and taxi driver suicides.More news: Iran clients tweaking U.S. sanctions as $90 oil looms
"Our city is directly confronting a crisis that is driving working New Yorkers into poverty and our streets into gridlock".
Six drivers have killed themselves in the previous year, including one who shot himself in his vehicle in front of City Hall after railing against politicians and Uber in a newsletter column.
"The unchecked growth of app-based for-hire vehicle companies has demanded action", he added, "and now we have it". The Times reported that Uber, which regained its license to operate for 15 months, agreed to report incidents to the police and share traffic data with the city, among other new measures.
"Max" from RideShare Drivers United has also welcomed the move in NY. Several thousand more drivers worked for black auto companies that dispatched vehicles by phone, mostly in the outer boroughs of Bronx, Queens, Staten Island and Brooklyn, where yellow cabs generally wouldn't travel.
Most drivers in NY work full time and are often immigrants without higher education.
That argument has gotten support from some civil rights activists like the Rev. Al Sharpton, who have long criticized the yellow cab industry for discrimination and profiling of minorities.
The New York City Council originally mulled a similar ban in 2015, but it stepped away from the issue before any legislation was approved. Uber is not going away'.