Severn Trent, said it had deployed drivers on about 50 small leaks "as a cheaper way to get live video footage" than using technicians.
The drivers sent images of the leaks to engineers, who then dispatched teams to fix them.
The GMB union told the BBC that using taxis had "huge safety implications for customers, drivers, and the public at large"
It said Severn Trent had been using "Uber and taxi drivers" over two weeks for dozens of jobs.
Stuart Fegan, a national officer with GMB said: "When I found out Severn Trent are using taxi drivers to investigate leaks, I thought it must be a joke.
"But no one is laughing - this has got huge safety implications."
He added that water engineers were "highly trained specialists" who could spot "if water is contaminated and if water produces a risk to the public".
Severn Trent, which serves an area stretching from the Peak District to Gloucestershire, said it had "carried out a series of two-week trials" as it looked to find "new, more efficient ways to find and fix leaks".
In a statement, the utilities company said: ""We're now looking at all the trial results to see the best way to help our engineers spend more time doing what's best for our customers by fixing leaks rather than simply assessing them."