The authority has made a small fortune by processing licences faster and far cheaper than most other areas, leading to more than 4,000 drivers from outside the city registering there.
New figures obtained by the Express & Star show three cabbies who got licences in the city operate for Bee Cars in Weymouth, which is 188 miles away.
A total of nine drivers with Wolverhampton licences ply their trade 144 miles away in Winchester, while 74 drivers work for 652's Private Hire in Mansfield and 23 licence holders drive cabs on the roads of Cambridge, which is a two and a half hour drive from the city.
Other cabbies with city licences work in Manchester, Stockport, Nottingham, Derby, Leicester, Coventry and Telford, while hundreds of licences have been given to drivers operating in bordering local authority areas.
Labour-run Wolverhampton council made £1.29 million from taxi licensing in 2016/17.
A taxi licence in the city costs just £69 – making it one of the cheapest in the country – and takes a maximum of 20 days to get. In Dudley one costs £242.77.
Campaigners have accused the council of 'bringing the city into disrepute' by treating cab licensing as a 'cash cow', while taxi bosses said the authority's leniency on tests was putting public safety at risk.
Lib Dem campaigner Layla Abbes, said: "It is clear that the Labour council only cares about profit and is not focused on public safety.
"There needs to be a change in the law so that only Wolverhampton licensed drivers and vehicles work within the area. We must end this farce of seeing Wolverhampton registered cabs all over Britain.
"The council is bringing the city into disrepute."
Shaz Saleem, the chairman of Dudley Private Hire and Taxi Association, said: "Wolverhampton licenses are everywhere and you can see that the council is intent on monopolising the market.
"They are making a fortune through giving out licenses through a system that is cheap and has very basic tests or non-existent for drivers.
Wolverhampton council's licensing manager, Chris Howell, said the authority was 'an attractive proposition' for drivers because of its 'state-of-the-art online system' which enables the speedy processing of licences.
The council insists it has 'stringent' standards for private hire licences.