Preston Taxis Ltd has been granted permission to extend its opening hours in Havelock Street from 6pm to 11:59pm despite opposition from local residents and the leader of the city council.
The firm was originally given planning permission to operate between 8am and 6pm by the planning committee in January.
But the owner has now been allowed an extra six hours under strict conditions banning taxi drivers and passengers from using the office as a pick-up point.
Council officers say that if cabs do not visit the site and drivers work remotely then operating until midnight would be "no different" to anyone else working from home.
The application was "called in" by council leader Coun Matthew Brown and fellow Labour member for Plungington, Coun Nweeda Khan, to be debated by the planning committee over concerns it could have an adverse effect on residents "in terms of excessive noise during the evenings" and exacerbate existing parking issues in the street.
The firm said it needed the extension of opening "due to rules for obtaining a new operator licence."
But officers revealed the council's licensing manager had confirmed there were no such rules and that a licence holder could work as many or as few hours as they wished.
Seven letters of objection were received from locals unhappy with the proposal to open until midnight. They voiced concerns about increased traffic, parking and excessive noise and disturbance.
The conditions imposed on the taxi firm limit the booking office to just one member of staff, contacting the drivers via an app. Drivers are not allowed to visit the office and must work remotely. Customer bookings must go straight to drivers and no customers are allowed to be picked up at the office, instead they must book a taxi by the app, online or by telephone.
There must be no waiting room at the property and sound insulation work has to be carried out to walls adjoining properties next door.
Louise Purdy, senior environmental health officer at the Town Hall, said that the firm had only sought to use the house for its booking office as a temporary measure "until more suitable premises are found."
But she added: "Unfortunately the applicant can't yet confirm for how long this will be, so in theory this could become a permanent arrangement."
A report by officers to the planning committee said: "Use of an office for the purpose of taking telephone calls/accepting bookings over the phone and passing bookings on to taxi drivers would be the equivalent of working from home, which is not considered to be disruptive to residential amenity.
"The proposed extended hours of 18:00 to 23:59pm would be no different (to) the previously approved hours of 08.00am to 18:00pm, in terms of impact on residential amenity.
"Moreover, the taxi booking office would only employ one full time member of staff and the comings and goings of 1no. individual from the site would have no greater unacceptable or significant impact than that of a traditional family dwelling."