Partners at Rai & Co and Gowri & Co - both based in Willesden, north London - have had their practising certificates suspended.

The companies were closed down on Monday after a joint operation by the Legal Aid Board and the Office for the Supervision of Solicitors.

The firms had their practising certificates suspended and can no longer provide legal services and disciplinary proceedings have begun against them.

The OSS said it could not give details of why the action had been taken.

Abuse encouraged

Last week the Home Secretary, Jack Straw, announced plans to force all immigration and asylum advisers to register to help weed out the worst offenders in a drive to stamp out illegal rackets.

Ministers believe they cost the taxpayer millions of pounds in legal aid fraud, encourage abuse of the asylum system and dupe desperate asylum seekers by overcharging them.

The proposals also aim to tackle the backlog of 50,000 asylum applications - some going back several years - by creating a single appeals tribunal.

The OSS said it had repeatedly asked the government to increase its powers to help it stamp out malpractice - but without success.

It also said the Home Office had never answered its requests for details about the law firms ministers were most concerned about.