An ordinary-looking Toyota hybrid sedan run by Eastmoor Taxis in the Melbourne bayside suburb of Aspendale Gardens is the first cab in Australia to run on three fuel sources: battery electrics, liquid petroleum gas (LPG) and compressed natural gas (CNG).

The last fuel on the list, CNG, is giving the company its biggest saving.

"We call it 'the toy'," says former railway employee and the taxi's day driver Robert Howard, a reference to the cab's trial status.

"It's the cost that's attractive. I can drive it on CNG on day shift for under $10," he says.

The daily refill will keep the car on the road for 250 kilometres and provide at least 20 per cent saving on the price of LPG, until now the cheapest fossil fuel available for vehicles in Australia.

Yuri Glouchkov, Eastmoor 's roster manager, said  a third of the firm's 100-strong fleet were Toyota hybrids using LPG.

The fluctuating price of the fuel, which hit a high of $1 a litre in December last year, had prompted the push into CNG, he said. Today LPG prices are hovering near 70¢ with the equivalent price for CNG about 50¢ a litre.

Natural gas is piped into most homes and businesses throughout Australia and is used to fire gas stoves and heaters. Natural biofuels are also derived from animal and vegetable waste.

In some countries, India and the United States particularly, CNG is widely used as vehicle fuel, said Tuyen Hua, business development manager for OES CNG SmartGas, which installs home and commercial CNG compressors and runs Australia's first public CNG refuelling station in Aspendale.

The main benefit is cost and reducing dependence on foreign oil. Australia imports 91 per cent of its fuel but has 90 years of natural gas supply.

SmartGas designed and fitted the VicRoads-approved CNG conversion on Eastmoor's test taxi but other cab companies were initially reluctant to consider alternative fuels, Mr Hua said.

"We kept on asking taxi companies. They wouldn't give us the time of day but when LPG hit 90¢ to $1 in the first week of December last year, they asked us what can we do."

The firm was focusing on regional fleets in Geelong, Ballarat and Bendigo, and was also in the final round of tenders to supply compressors in Indonesia.

"They're planning to open up 150 CNG outlets in Jakarta alone and are looking at 15 in first quarter next year in existing fuel stations," he said.

Mr Glouchkov hopes to start converting at least a quarter of Eastmoor's existing taxi fleet to CNG once the depot has a dedicated $8500 compression unit installed this December.

"The only concern is cost of the installation of the system. That will go down once more people start using it."