The taxicabs will hit the roads within three months, Communications Minister Obaidul Quader told a press conference on Wednesday.
A private organisaiton will supervise 250 taxicabs while the rest of them will be run by Sena Kalyan Trust.
Quader said 150 taxicabs will ply in Chittagong under the supervision of Sena Kalyan Trust.
The number of taxicabs has now come down to 3,000 in Dhaka from 12,000 in 2007.
Taxicab owners blame red tape and indifference of the authorities for many of them going out of business.
The reduced number of taxicabs is a problem for commuters who often have to pay exorbitant charges for those few available.
The Communications Minister said they had also approved 1000 air-conditioned buses.
Once these buses are on the roads, the transport crisis would ease to a great extent, he said.
Quader said the government is trying to recruit female drivers in state-owned buses.
Women are recognised as reliable drivers all over the world because they are cool and less excitable , he said.
The minister said the reckless driving would drop if the women were recruited as drivers.