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UPDATE 3-Uber stripped of London license, plans to appeal

* London declines to renew Uber license

* Uber to appeal, can operate during process

* London mayor supports the decision

* Graphic: http://tmsnrt.rs/2jQOqKD (Adds reaction from cab drivers, user, background, details)

LONDON, Sept 22 (Reuters) - London stripped Uber on Friday of its license to operate from the end of next week in a huge blow to the taxi service and 3.5 million users in one of the world's wealthiest cities.

The capital's transport authority said the Silicon Valley technology giant was not fit and proper to hold a private vehicle hire license and it would not be renewed when it expires on Sept. 30.

Uber, whose 40,000 drivers in London account for a third of private vehicles hired, said it would contest the decision and regulator Transport for London (TfL) will let it operate until the appeals process is exhausted.

"Uber's approach and conduct demonstrate a lack of corporate responsibility in relation to a number of issues which have potential public safety and security implications," TfL said. "TfL must also be satisfied that an operator is fit and proper to hold a license.

Specifically, TfL cited Uber's approach to reporting serious criminal offenses, background checks on drivers and software called Greyball that could be used to block regulators from gaining full access to the app.

"Transport for London and the Mayor have caved in to a small number of people who want to restrict consumer choice," said Tom Elvidge, Uber's general manager in London. "We intend to immediately challenge this in the courts."

The loss of the license comes after a tumultuous few months for Uber, including a string of scandals involving allegations of sexism and bullying at the San Francisco-based start-up that forced out former CEO and co-founder Travis Kalanick.

Uber, which is valued at about $70 billion and whose investors include Goldman Sachs, has faced protests around the world for shaking up long-established taxi markets.

The taxi app has also been forced to quit several countries, including Denmark and Hungary, and faced regulatory battles in multiple U.S. states and around the world.

HATED BY CABBIES LOVED BY USERS

London's traditional black cab drivers have attacked Uber, saying it has undercut safety rules and threatened their livelihoods. Uber has been criticized by unions and lawmakers too and been embroiled in legal battles over workers' rights.

London police also complained in a letter published that Uber was either not disclosing, or taking too long, to report serious crimes including sexual assaults and this put the public at risk.

Uber said then its drivers passed the same rigorous checks as black cab drivers and it has always followed TfL's rules on reporting serious incidents and it had a dedicated team that worked closely with London's police.

London Mayor Sadiq Khan, a Labour politician who has criticized Uber in the past, said he backed the decision to reject its application for a new license.

"It would be wrong if TfL continued to license Uber if there is any way that this could pose a threat to Londoners' safety and security," he said.

Drivers of London's black cabs, who have snarled up the city's streets in protest at the app over the last few years, welcomed Friday's decision.

"Their standards are not up to scratch," said 71-year-old Walt Burrows, who has driven a black cab for 39 years. "The black cab is an iconic part of London. What you get with a black cab is a metered fare and you know you're safe."

Uber is likely to come under more fire next week when it appears in court to appeal a verdict that granted two of its drivers rights such as the minimum wage, the latest "gig economy" battle between firms lauding the flexibility enjoyed by self-employed drivers and unions accusing them of exploitation.

Uber has, however, announced a series of changes over the last few months to improve conditions for its drivers, including the introduction of in-app tipping and plans to increase some fees.

Alongside Uber's drivers, some of London's 3.5 million registered users expressed concern as to how TfL's decision would affect their lives.

"It will definitely impact my life," said 43-year-old event planner Rimi Char, who users the app at least once a week. "I have got used to the ease and cost effectiveness of using Uber and I've always had positive experiences."

One of Uber's British competitors in London, Addison Lee, is also awaiting a decision from TfL about a longer-term license. The company declined to comment on Friday.

(Additional reporting by Michael Holden, Kylie MacLellan, James Davey, Elizaabeth O'Leary and Elaine Hardcastle; editing by Guy Faulconbridge/David Clarke)