Operations at two hospitals were suspended after surgical kits were found to be contaminated with human flesh.
Medics at Hillingdon Hospital and Mount Vernon Hospital, both in Middlesex, discovered the grim traces while preparing for surgery this week.
The contamination was discovered initially at Hillingdon Hospital on Wednesday, with operations continuing with clean instruments checked by theatre staff.
Two hundred kits, which were supposed to have been cleaned, were provided to the hospitals by IH Sterile Services but 24 were found to be contaminated.
The hospitals, run by Hillingdon NHS Trust, suspended operations yesterday afternoon to return all the kits to be checked again.
Operations were continuing as normal today.
An IHSS spokesman said: "We are dismayed that one of our new, high-tech decontamination units, operated by experienced personnel, has failed in this way.
"We have begun an urgent investigation to establish the cause of this clearly unacceptable situation.
"We are determined to correct matters and are placing additional safeguards at all our facilities, with additional inspection requirements.
"We apologise wholeheartedly to the patients and hospitals we have inconvenienced."
IH Sterile Services provides sterilisation to numerous hospitals across England.
The dirty instruments had been delivered from a centre in Ruislip.
A trust spokesman said: "We are waiting for the full results of the inquiry and they are working very hard to give us answers to the questions.
"They are normally a reliable company. This seems to be a one-off aberration."
A Department of Health spokesman said: "We are aware of the incident at Hillingdon Hospital.
"Patient safety is our top priority and hospitals have a responsibility to ensure surgical equipment is clean and safe.
"Failure to do this would be taken very seriously by the Government and the regulators."
Hillingdon Hospital last hit the headlines in 2003 when the body of Muslim woman Habiba Mohammed was desecrated.
When viewing the 65-year-old's body after she died from cancer, her relatives discovered she had been covered in rashers of bacon.
It is strictly against the laws of Islam to touch or eat pork.
Police offered a £5,000 reward for information and two mortuary workers were questioned over the incident.
During their inquiry, detectives discovered a white woman's body was also desecrated with black marker pen in 1996 at Hillingdon's morgue.
Karen Jennings, Unison head of health, said: "To think that these dirty instruments have been minutes from the operating theatre is horrendous.
"Unison has long been warning that taking sterilisation services out of hospitals is dangerous and could cost lives.
"There is clear evidence that in-house sterilisation services are cleaner, more efficient and more reliable.
"Transporting equipment across London has obvious potential for contamination, or for damaging delicate instruments.
"There have been many other cases across the country where patients have had their operations cancelled because the instruments supplied by a private sterilisation company were unusable."