The offsite firm has confirmed issues at its 154-home development in Selby, North Yorkshire and a 185-home scheme in Bristol.
Site sources have shared photos with the Enquirer showing units heavily contaminated with black mould.
It is understood the mould problems developed while the factory-built homes were being stored ahead of installation on site.
L&G said it has now “incorporated lessons learnt into our storage process.”
Remediation work is currently being carried-out at the sites to remove the mould.
A site source said: “Specialist contractors have been drafted in to clean the mould which has been found everywhere.
“Apartments have been ripped out back to the shell to remove all traces of the mould in plasterboard and timber.”
An L&G spokesperson said: “Both Selby and Bristol have experienced delays due to isolated issues which have or are being rectified in collaboration with our subcontractors and the NHBC.
“As with all house builders issues are identified during the construction phase and we ensure these are fully rectified.
“No homes have or will be handed over without meeting the NHBC rigorous quality checks and warranty provision.
“This problem is related to site activity not factory manufacturing process and we have incorporated lessons learnt into our storage process.”