A leaked report claims council officers in South Ribble failed to carry out background checks on taxi drivers who were taking children to and from school.
It follows allegations that childen have been abused by taxi drivers in the area.
The council says it has now completed a full review of taxi licences, including checks on all drivers.
ITV News has learned that two council officers accused of issuing licences without checks have been suspended.
In a statement, the council said: "We take matters of public safety extremely seriously and would like to reassure the public that we have acted quickly and urgently to investigate these serious issues.
"A fully independent review was commissioned by the council and since receiving its interim report, we have conducted a full review of all taxi licences, including checks on all drivers. Those are all now complete and no further issues have been raised.
"In addition, we have accepted the priority recommendations in the interim report and we have already implemented the majority of them and are working to complete the rest as soon as possible.
"We can confirm that two members of staff are currently suspended pending a further internal investigation, and continue to operate a full licensing service in the meantime.
"We will be publishing the final independent report, in full, once the investigation has concluded."