The 41-year-old man, from Deepdale, was arrested in December after filming an offensive video which appeared to threaten Muslim converts to Christianity.
Filmed in a car driving around the Moor Park area, the video was shared to a private WhatsApp group but went viral after it was leaked to social media.
Following his arrest, the taxi driver voluntarily surrendered his licence and has not been behind the wheel of a cab since.
The man has since apologised for his comments in a follow-up video asking Christians and Muslims for forgiveness.
Zain Khan, speaking on behalf of the Ex-Muslims Association of Preston, said he is urging Preston City Council to take action because he fears the man's extreme views "puts people at risk".
Mr Khan, who helps run an organisation for ex-Muslims in Preston, also said he is "deeply saddened" at the CPS decision not to prosecute the taxi driver.
"But we are left reassured by the thorough and detailed investigation led by Chief Inspector Sansbury from Lancashire Constabulary, based at Preston Police Station.
"We thank Preston Police for being proactive and transparent throughout the course of their investigation.
"We urge Preston City Council to take note of the amount of signatories collected on the petition calling for the withdrawal of the man's taxi licence.
"His extreme views carry a severe conflict of interest as a taxi driver with potential customers, and also puts people at risk given the nature of his comments during the video."
The petition currently has more than 2,000 signatures.
The city council has reassured Mr Khan and the public that the man will not be able to drive a hackney cab until the matter is reviewed at a licencing hearing.
A Preston City Council spokesperson said: "A licensing hearing will be arranged at the earliest opportunity where all the relevant facts will be considered.
"The driver will be unable to drive a Hackney Carriage vehicle in Preston until the matter has been considered by the Taxi and Miscellaneous Committee."