Some drivers have fitted their own "isolation" screens in a bid to protect themselves better from the pandemic.
But they have now claimed the council has been ordering them to remove the protective screens from their vehicles.
Council chiefs in the city have confirmed the request – but said any changes to the vehicles needed to be approved by the licensing services.
Ali Khawari, speaking on behalf of private hire drivers in the city, said: "We are a group of taxi cab drivers licensed by Wolverhampton Council, and we would like to raise this important issue which we feel is being neglected by the council and all the relative authorities.
"As taxi drivers, we would like to be able to work under safe conditions and do whatever it takes to keep ourselves and our passengers safe from the Covid-19 virus.
"Most of the councils in the UK are allowing drivers to take all the necessary precautions to stay safe, and install driver isolation sheets in their cars if they want to do so.
"But Wolverhampton Council is making it impossible for drivers to use these precautions. Unlike other councils, they are going out of their way to have these driver isolation sheets removed from cars if they see one.
"Drivers are also being threatened with suspension of their PHV (Private Hire Vehicle) license if they refuse to remove this sheet. This puts drivers and passengers at risk of spreading the virus," he added.
"When we enquired about this, the council told us that we must carry the specified number of passengers shown on the PHV license and cannot ask people not to sit in the front of the car.
"Having a passenger sitting in the front seat next to us puts both them and the driver in grave danger.
"At times like this, surely the driver and the passengers’ safety must be of the utmost importance? All other businesses in the UK have installed plastic separation sheets in shops, banks, schools, hospitals etc, so why is it different for taxi drivers?"
A spokesman for the authority said: "The City of Wolverhampton Licensing Authority have not banned partitions.
"Condition 2.1 of the licence for private hire vehicles states: ‘No material alteration or change in the specification, design, condition or appearance of the vehicle shall be made without the prior approval of Licensing Services’.
"Therefore, no partitions, screens, safety guards should have been fitted to any licensed vehicle without the prior approval of Licensing Services.
No approval has been given to any vehicle proprietor and as such any screens fitted are in breach of their licence condition.
“The safety of the public is of paramount importance to the Licensing Authority and as such, much like the government, we follow the science.
"There is no evidence available that demonstrates that partitions reduce the risk of transmission of Covid-19 infection.
"Partitions do not provide a fully sealed compartment which completely separates the driver from the passenger."
"The safety of the public is of paramount importance and simply going along with populistic trends cannot be allowed to impede on the public’s safety.
"Everyone is encouraged to follow the current government advice on Covid-19 which can be found at www.gov.uk/coronavirus"