The chief investigator at Customs and Excise has been suspended as Scotland Yard inquiries continue into a series of excise frauds in the mid-1990s.
It was alleged Customs officers used entrapment in the fraud cases
Director general of law enforcement Terry Byrne has been suspended on full pay along with solicitor David Pickup.
Police are investigating 20 serving or former Customs officials over a customs probe into diversion fraud.
The Treasury, which is in charge of Customs, said inquiries are ongoing but charges may not necessarily follow.
In a letter to the chairman of the Commons Treasury Committee, Treasury minister John Healey stressed the suspension of the two officials did not prejudge the outcome of the investigation.
The Metropolitan Police inquiry - codenamed Operation Gestalt - is into Customs and Excise's handling of a series of fraud cases in the 1990s.
They related to claims of smuggling duty-free alcohol from a bonded warehouse in east London, London City Bond.
The cases fell apart when Liverpool Crown Court heard customs officers had encouraged the offences in a sting operation.
In a subsequent review, Lord Justice Butterfield found major failings in the handling of the cases, which involved the alleged evasion of more than £600 million in duty and the police launched an inquiry.
Last Friday, Customs chairman David Varney received an update on the inquiry naming 14 serving Customs officials and six retired personnel under investigation - among them Mr Byrne and Mr Pickup.
The attorney general said former director of public prosecutions Sir David Calvert-Smith QC would take over as acting director of the Customs and Excise Prosecutions Office.
Five of the officials have been moved to other duties and six allowed to continue in their current posts because their work does not impact on the police inquiries or Customs operations.
Another serving member of staff has been classified as a potential witness.
John Healey also announced a new structure would be put in place to ensure Customs' work was scrutinised externally after its planned merger with Inland Revenue.
He said that the merged HM Revenue and Customs would be exposed to the same external scrutiny as the police, with monitoring by HM Inspectorate of Constabulary and Police Complaints Authority.