Sutton and Wandsworth were among the best performing councils in England last year, according to the Audit Commission's annual report.
The Comprehensive Performance Assessments (CPA) measures the quality of council services and each council's commitment to improvement.
It also examines services such as housing, elderly care, education and recycling and considers how efficiently each council is run.
Sutton and Wandsworth were given both four-star and "improving strongly" ratings.
Lambeth was the most improved council in the country, moving from one to three stars.
Croydon, Hounslow, Richmond and Kingston their three-star ratings and Merton improved from a two-star in 2006 to a three-star in 2007.
Michael O'Higgins, chairman of the Audit Commission, said: "The 2007 results show that councils continue to rise to the challenge of delivering better services for local people at better value for money."
The figures also show 97 per cent of 33 London boroughs are rated as improving "well" or "strongly", with 94 gaining three or four stars.
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