The move has been backed by the areas licensing committee.
They want all 313 licenced vehicles in the East Riding to have the kit by the autumn.
The East Riding's Health, Safety and Licencing Manager - Louise Wilson - says the compulsory system would replace existing voluntary arrangements, and would bring a number of benefits.
The system would record both video and audio. Councillors heard the moves were designed to improve safety for drivers and passengers, help with criminal investigations and could save on insurance costs with feedback broadly welcoming the plans.
Council figures show CCTV footage from taxis has been used 53 times in investigations conducted by County Hall officials and Humberside Police.
A report to the committee stated footage had lead to action being taken in assault cases, both from passengers and drivers.
Footage has also been used in theft and burglary cases and to disprove false accusations made against drivers.
Council figures show footage 18 times for vehicle accidents, 15 for allegations against drivers and six for assaults on drivers.
Footage was used three times for incidents including soiling the inside of cars and 11 for incidents outside vehicles.
Councillors heard the new systems would allow both drivers and passengers to turn audio recording on, with a light also coming on to alert people they are being recorded.
Licensing officers told the committee it would allow customers to record conversations if they became uncomfortable and it may deter drivers from talking to them inappropriately.
They added it would also mean that drivers could record conversations with customers if they needed to.
Health, Safety and Licencing Manager Louise Wilson explains what the new scheme will mean.
The Licensing Committee backed making CCTV a requirement, with the council agreeing to foot the £160,000 cost of replacing and fitting new systems with audio recording.
Council officials also hope the scheme will encourage more new drivers to come into the taxi trade to help serve the East Riding’s night time economy.
The decision for the council to fund the scheme comes as the taxi trade continues to reel from the effects of coronavirus, with 57 drivers surrendering licenses in two years.
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