Staff at an agency which supplied the council with carers have been arrested accused of using false identities to employ illegal immigrants.
Police and the UK Border Agency raided Carefirst 24 in Upper Mulgrave Road, Cheam, and arrested four people at about 10.30am on Tuesday.
Two British woman aged 48 and 52, a 52-year-old British man and a 34-year-old Mauritian man - were held on suspicion of conspiracy to defraud and conspiracy to facilitate foreign nationals.
The suspects are alleged to have employed illegal workers under former workers' identities.
Carefirst 24 provides care to elderly and vulnerable people around Surrey and South London and has provided staff to Sutton Council - although the council says it has severed ties with the business.
No-one from Carefirst 24, which was commended in last year's Sutton Business Awards, was available for comment.
People who are receiving care through Carefirst have been asked to urgently seek new arrangements.
Rachel Bennet of the UK Border Agency said: "This was a successful operation. With the help of partners like the Metropolitan Police Service and Sutton Borough Council we are determined to do whatever is necessary to investigate alleged abuses of our immigration system."
Detective Inspector Sarah Rees who runs Sutton's CID added: "The operation was a good example of the Met Police in Sutton and the UK Border Agency working closely together to protect elderly and vulnerable people and to keep them safe."
Carefirst 24's website claims it has an excellent rating from healthcare watchdog the Care Quality Commission (CQC) and that it specialises in providing "highly vetted and highly experienced staff" to the NHS and local authorities.
Executive director and founder Mahen Caussyram is a member of the Royal College of nursing and has a background in working in a day centre and developing outreach care for prisons.
Sutton Council has not said to what extent it has worked with Carefirst 24 or when it stopped using it.
A spokesman said: "We have been pleased to support the Police and UK Border Agency in their investigation. We no longer use this provider and have ensured the vulnerable people we are responsible for, receive the best quality of care."
A Filipino man and woman were arrested at a separate South London address on Monday morning in connection with the operation.
All those arrested have been bailed to various dates in April.
Anyone receiving care from Carefirst 24 has been asked to urgently contact the brokerage team at the London Borough of Sutton on 020 8770 4554 or Lynn Stephens at Surrey County Council on 07975 590302.