Housing enforcement officers discovered 26 people living in a three-bedroom East Ham house last week.
Altogether, 25 adults and one child were found to be living in the family home, which is licensed to hold a maximum of seven people, when enforcement officers attended the property last Friday.
It is believed that “three or four” families lived in the house, with a family of three occupying the front room on the ground floor alone.
Seven of the occupants were found living in the basement, which had no windows, inadequate ventilation, and could only be accessed from the back garden.
Officers are also investigating a series of electrical and building hazards. These include a broken toilet, rubbish, and broken furniture in the back garden.
Newham Council said they intend to prosecute the female landlord who was already served with an enforcement notice in 2012 for using the property as a house of multiple occupation without planning permission.
But the case was dropped in May 2013 after it was found that the property was housed by a single family.
A statement from the council also highlighted that the property was due to be visited by enforcement officers on Thursday.
It added: “Following this visit the housing team will write to the landlord and give them a set period to respond to the issues raised.
“If they fail to accept the council’s findings or make adequate arrangements to improve the state of the property an improvement notice will be issued. Following that a prosecution could be pursued.”
The council also found tenants to paying different prices in rent with occupants in the basement paying £20 a month while the family in the ground floor front room paid £180 a week.
Altogether the rent amounted to £2340 a month.
According to statistics from charity, Shelter, Newham has the highest level of overcrowding in the UK.
During a speech at the Chartered Institute of Housing this week, Sir Robin Wales addressed the issue of housing in Newham.
He said: “The choice for many of my residents is stark: succumb to rogue landlords, who have no qualms about packing five people to a room and renting out homes without roofs.
“Or leave London altogether, abandoning it to the wealthy and asset hoarders, leaving our public services without the nurses and teachers we need.”
The raid was carried out as part of the council’s initiative to tackle rogue landlords.
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