Catalysis of the reaction: biphenyl-2-ol + H+ + NADH + O2 = biphenyl-2,3-diol + H2O + NAD+. Also converts 2,2'-dihydroxybiphenyl into 2,2',3-trihydroxy-biphenyl.
2-hydroxybiphenyl,NADH:oxygen oxidoreductase (3-hydroxylating)