A small number of MPs and peers will face criminal investigations into allegations they misused their expenses.
Scotland Yard confirmed last night that a joint assessment panel of senior detectives and prosecutors decided full inquiries were necessary.
The police inquiries were expected to focus on politicians accused of deliberately misleading the authorities or claiming “phantom mortgages”.
The investigation will be conducted by officers from the Met's Economic and Specialist Crime Command, overseen by Temporary Assistant Commissioner Janet Williams.
It is understood the joint panel of experts will continue to consider a number of other individuals.
A Metropolitan Police spokesman said: “After consideration by the joint Metropolitan Police and Crown Prosecution Service assessment panel, the Met has decided to launch an investigation into the alleged misuse of expenses by a small number of MPs and peers.”
The decision follows several weeks of preliminary inquiries by a team of police investigators, prosecutors and legal experts.
Scotland Yard declined to name the MPs or peers at the centre of the police inquiries or their political allegiance.
But it is widely known that those at the centre of the initial probe were linked to so-called “phantom mortgages”.
Labour MPs David Chaytor and Elliot Morley both announced they would stand down after it emerged they claimed interest payments for paid-off mortgages.
Two other MPs, Ben Chapman and Bill Wiggin, may also face further inquiries after they were exposed as claiming for mortgages that did not exist.
Baroness Uddin, who apparently claimed an empty Maidstone flat was her main home so she could claim expenses for peers living outside the capital, may also face questions.
Commissioner Sir Paul Stephenson has held a series of talks with Director of Public Prosecutions Keir Starmer over the thorny allegations.
The senior officer said his detectives would follow the evidence.
Speaking yesterday, he said: “We will make a decision on what the evidence is or is not.”
He said the Parliamentary authorities have given “good co-operation” after investigators asked for more information.
Earlier this month the Metropolitan Police ruled out wide-ranging action against the vast majority of parliamentarians embroiled in the controversy.
Officers believe there is only a realistic chance of prosecution in cases where it can be proved individuals misled Parliament's Fees Office. They said the parliamentary authorities may instead choose to consider the details of some applications for expenses and allowances.
There have been repeated calls for police inquiries after allegations that public money was dishonestly obtained.
Profligate spending on luxury items by a minority of MPs further inflamed the public and Westminster watchers.
Bury North MP Mr Chaytor said he would pay back £13,000 after admitting an “unforgivable error” in continuing to submit £1,175 monthly bills for a paid-off loan.
Mr Morley was suspended from the Parliamentary Labour Party after admitting a similar £16,000 claim and referring himself to the Westminster sleaze watchdog.
Parliamentary standards inquiries into Mr Chaytor and Mr Morley are on hold while the police consider their cases.