The owner of the Westminster shop in Buckingham Palace Road may be prosecuted, and could face a jail sentence if convicted.

The shirts were being sold at two for £10 ($15) or £5.99 ($9.37) each.

Westminster Council said the seizure showed that a major counterfeiting operation had already begun. 

Spokesman Brian Connell said that despite it being the first time they had found counterfeit merchandise, they expected a surge in forgeries ahead of the Games.

Connell said: "We are regularly on the lookout for fake goods, for example designer labels, but this is the first misuse of the Olympic logo we have seen."

Officials were alerted by officials at London 2012, which relies on its brand to raise sponsorship and licensing towards the £2 billion ($3 billion) cost of staging the Games.

Connell said: "We hope the actions taken by our trading standards team against this particular retailer will serve as a strong warning to others who may be thinking they can make some easy money by buying and selling illicit Olympic merchandise."