An estimated £162,000 worth of illegal tobacco was seized during a raid in Newham.
Newham Council says 250,000 cigarettes were found - along with 30kg of hand-rolling tobacco valued around £9,000 - at an unnamed retail premises in the north of the borough last Saturday (June 11).
The majority of the tobacco was not duty-paid and suspected to have been smuggled into the country, a council spokesperson said.
Some was believed to be counterfeits of popular brands, which are likely to contain harmful substances and may not self-extinguish.
The council says the investigation is ongoing and the seized products will be fully assessed to determine the exact offences that may have been committed.
Cllr Carleene Lee-Phakoe, cabinet member for crime and community safety, said: "Illegal tobacco is dangerous and through our trading standards operations, we are taking direct action to protect our residents by removing these harmful substances.
"Illegal cigarettes often do not include correct health warnings and appear in colourful packaging - as opposed to the legal, standardised packaging which uses only one specific deep green colour.
"Far from being a victimless crime, illegal tobacco trading provides affordable access for children and young people, makes it harder for people to give up as the product is cheaper, and affects the trade of legitimate retailers.
"This also supports the organised criminal gangs who smuggle the tobacco in and sell it on, which has deep links to modern-day slavery."
Trading Standards officers visited the shop with Wagtail specialist detection dogs.
It was part of the national Operation CeCe campaign by Trading Standards and HM Revenue and Customs.
Anyone who is convicted of being involved in selling or supplying illegal tobacco can face penalties including up to 10 years in prison and an unlimited fine.
If you have information about the sale of illegal tobacco in Newham, you can report it via the Citizens Advice Consumer Advice line on 0808 223 1133.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here