David Cameron has said it was a "bad decision" to allow a convicted rapist to become a taxi driver in Milton Keynes.
Members of a licensing committee saw a document detailing crimes committed by Nadeem Ahmed Kiani before they decided to grant him a licence in 2011.
The 44-year-old was imprisoned in 1994 for rape and serious sexual assault. His taxi licences have been revoked.
The prime minister said it was a "rather shocking story".
Mr Cameron said it was the government's responsibility to "set the ground rules" and advised local authorities to check whether drivers were "fit and proper persons".
Image copyright Milton Keynes Council Image caption Subhan Shafiq stepped down as Milton Keynes mayor
"We advise they should do Criminal Record Bureau checks," he said.
"It's obvious in this case that the council followed the correct procedures but then made a bad decision.
"When that happens, the person making that decision should bear the consequences."
Milton Keynes mayor Subhan Shafiq, who had vouched for Kiani, resigned from his post last week.
The document detailed how Kiani and a co-defendant had picked up prostitutes in a vehicle, threatened them with weapons, then raped and sexually abused them.
Mr Shafiq had described Kiani as "a friend" and spoke of his "good current character and family circumstances".
Kiani was sentenced to eight years imprisonment at Middlesex Guildhall Crown Court in October 1994.
His name was also added to the sex offenders register.