The Taxi and Limousine Commission is being sued over its plan to reissue 2,500 unused green cab licenses as livery licenses, with the city’s cabby union saying the move is illegal and would clog the market.

The New York Taxi Workers Alliance — which represents taxi drivers, medallion owners and ride-share drivers in the five boroughs — warned of unfair competition if the TLC’s pilot plan to revamp the green-cab licenses is allowed to proceed.

“If TLC believes it can properly license 2,500 new FHVs through a pilot program in this manner, nothing would prevent TLC from issuing 5,000 or 10,000 further licenses,” the suit reads.

By law, the TLC limits the number of plates it issues to for-hire vehicles in an effort to reduce congestion and market saturation.

The plates at the center of Monday’s suit were retired from green-cab service as that side of the industry has contracted in recent years.

The green-cab program — formally known as “street-hail livery” — was meant to supplement scare yellow cabs outside of Manhattan and bring more transit options to underserved areas. Many green-cab drivers lost business due to app-based ride-share firms like Uber and Lyft, and ultimately turned their licenses back in to the TLC.

The commission voted earlier this month to put 2,500 of those dormant licenses into service as borough-based livery cars that cannot accept street-hails. The cars would still be bound by the same geographical limits as the green cabs — unable to pick up passengers at airports or south of W. 110th St. or E. 96th St. in Manhattan.

The NYTWA argued Monday that, since the new livery cars are prohibited from picking up riders who hail them on the street, the pilot program is at odds with the initial purpose of the licenses.

“The TLC cannot change the profile of a green cab,” NYTWA head Bhairavi Desai told the Daily News. “The regulations regarding green cabs were set by the state. The TLC cannot go and change them overnight.”

Desai argued that the increase in cars would be bad for her members.

“Even in the city of New York, we have a finite number of passengers,” she said. “We cannot have an infinite number of cars.”

TLC spokesman Jason Kersten said the TLC was in the process of reviewing the complaint.

Applications for the 2,500 livery licenses were set to Tuesday.