Police found 35 Muslim men crammed into a three-bedroom north-west London house which had wall-to-wall mattresses in almost every room.
Eight men were found sleeping in one room, and mattresses were found in the kitchen and back garden at the property in Brent.
Council officers and police have launched an investigation into the landlord of the unlicensed shared home.
The discovery came as part of a dawn raid by officers following complaints of overcrowding and anti-social behavior on Tuesday.
Images from the raid show a large number of shoes in the hallway and mattresses completely covering the floor.
A Brent Council spokeswoman said the tenants were not evicted from the property and may remain there throughout the investigation.
Cllr Harbi Farah, cabinet member for housing and welfare reform at the local authority, said the landlord was “exploiting people who can least afford it.”
She added: “It’s a shameful practice and this is an especially shocking example. Any landlord treating their tenants unfairly should be in notice – we’re coming for you.”
The authority said it voted in new civil penalty measures to fine rogue landlords up to £30,000 for housing law breaches, such as renting out unlicensed properties.