Wearing riot gear, officers entered the multi-million pound mansion which the squatters had earlier occupied in Belgrave Square in an upmarket area of the capital and home to numerous foreign embassies.
However, they remained in a stand-off with the squatters who gathered on the balcony at the front of the property where they had unfurled a Ukrainian flag and placed a banner reading "This property has been liberated".
"You occupy Ukraine, we occupy you," said a statement from the squatters, who described themselves as anarchists.
"By occupying this mansion, we want to show solidarity with the people of Ukraine but also the people of Russia who never agreed to this madness."
Police said they had searched the property and were satisfied there was no one inside.
"We continue to engage with those on the balcony as we balance the need for enforcement with the safety of all involved," police said on Twitter.
The UK froze the assets of Deripaska last Thursday, one of a number of Russian oligarchs targeted after the invasion of Ukraine, which the Kremlin has called a "special military operation".
Deripaska, who has stakes in energy company En+ Group which owns one of the world's major aluminium producers UC Rusal, is worth an estimated 2 billion pounds ($A3.6 billion) and has a multi-million pound property portfolio in the UK, the British government said at the time.
The UK says Deripaska is closely associated with the government of Russia and Russian President Vladimir Putin.
London High Court documents from 2007 identified Deripaska as the beneficial owner of the Belgrave Square mansion.
A judge in a court case the year before said the property and another house he owned outside the capital, were then worth about 40 million pounds.
Representatives of Deripaska did not immediately respond to a request for comment.
Shortly before the sanctions were imposed, Deripaska said peace was needed as soon as possible in Ukraine and warned that Russia would be different after the conflict.
The UK has so far sanctioned about 20 ultra-wealthy Russian individuals, including Chelsea soccer club owner Roman Abramovich and Alisher Usmanov, freezing their properties across London and banning them from coming to the country.
"Squatting in residential buildings is illegal but we are working to identify the appropriate use for seized properties while owners are subject to sanctions," a spokesman for Prime Minister Boris Johnson told reporters.
"We certainly don't think people should break the law."
