Douglas Borough Council is warning tenants who sub-let their homes their tenancy agreements will be cancelled.
Reports are being prepared on seven cases of unauthorised occupation, and investigations are continuing to see if there are any more.
There are currently 600 people on the waiting list for local authority houses in Douglas, and councillors say they will take firm action against what they see as queue jumpers who are making profit at the Corporation's expense.
Public Health and Housing Committee chairman Colin Cain is determined to stop the practice (play audio file):
At the same time there's a clamp-down on the practice of taking in unregistered lodgers.
A number of individuals who came forward during an amnesty period have been given permission to live in other people's local authority homes, on payment of an additional sum in rent to the Town Hall.
However, those who don't hand over the money are being warned they too could have their tenancy agreements ended.
Both issues are on the agenda for this afternoon's meeting of the Borough Council.