Four homes have been recovered by the council after it was discovered they were being sublet illegally.
Three more properties are being investigated and face being reposessed and reallocated.
The discovery came during an ongoing audit of properties used to house homeless families.
As part of the exercise, help is also being provided to residents in rent arrears who may be at risk of eviction.
Deputy leader and cabinet member for housing, Cllr Saima Ashraf, said: “We operate a zero tolerance on fraud and will not tolerate tenants illegally sub-letting council properties and making a profit from it.
“It is unacceptable that homes are being denied to people who need it the most.
“If you are illegally subletting your home in Barking and Dagenham we will find you and take it back and you may face criminal charges.”
The four homes seized are now being occupied by families in need of housing.
The ongoing audit means further homes could be recovered following an investigation.
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