Hammersmith and Fulham council has confiscated hundreds of electric bikes following more than 1,500 complaints from residents.
But at the beginning of last month it noticed that about 70 of the bright green cycles had gone missing from one of its pounds in Fulham and under the Hammersmith flyover.
Contractors working for Lime had used the bikes’ GPS to track their position and then removed them from the local authority lock-up to put them back on the streets.
The company confirmed the workers responsible had been sacked.
A spokesman said: “Lime understands the importance of keeping pavements in Hammersmith and Fulham — and across London — clear of obstructions.
“We are working constructively in partnership with the council to recover the limited number of bikes that have been impounded via the agreed process.
“An operations contractor recently collected bikes impounded by the council without permission from Lime or the local authority.
“This broke the terms of Lime’s agreement with this contractor and we have now terminated this relationship.”
Dockless electric bikes are available for hire across the capital in schemes aimed at improving transport and cutting pollution.
But Hammersmith and Fulham council was forced to seize more than 100 dumped e-bikes last month after they were found obstructing roads.
Since May, the town hall said it had received more than 1,557 complaints about abandoned e-bikes, belonging to three different companies.
A council spokesman said the incident had been reported to police.
They added: “After we removed the dumped Lime e-bikes, we’re extremely disappointed that they didn’t follow the agreed return policy — but we’ll continue to promote cycling.”
Lime launched in London four-and-a-half years ago, and riders have since taken over 12 million trips on its bikes.
The company says use in the capital is growing by more than 10 per cent each month.
Council leader Stephen Cowan said there had been meetings with Lime since the incident and it had been “sorted”. He added that Lime is a “great addition to public transport”.