This paper describes a prototype system based on floating taxi for traffic condition identification. The system consists of in-vehicle hardware units placed in floating taxi and backstage database that process all data send from the report units. The communication between the taxi and the database center is based on a very compact wireless communication protocol. The taxi sample size is decided by the variables: section traffic information update cycle, data sampling interval, section covering ratio. The test in a road section showed that the system is operational which could offer useful reference for urban traffic management and resident trips decision.