Liverpool City Council's licensing committee is introducing the compulsory test following complaints about drivers not understanding the language.
But the committee has deferred plans to scrap the traditional street knowledge test for private hire drivers.
Under this assessment aspiring drivers are tested on their knowledge of road locations in the city.
The "oral recognition assessment" test will be given to new applicants seeking to become licensed Hackney carriage drivers.
Language test
It is in three sections - listening, verbal and numerical questions.
They must then take the street knowledge challenge.
The new procedure will come into effect from 22 March.
A report approved by the licensing committee said the use of a language test had been adopted by several authorities in the UK, including Birmingham City Council.
A spokesman for Liverpool City Council said the reason for the introduction of the new test was due to the increase in applications from people from eastern European countries.
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