The MP, a former shadow ministers for equalities, accused police of racial profiling after she and a friend were stopped by officers on blue lights in Hackney, east London, on Sunday .
The 50-year-old and and her friend, who are both black, recorded the incident, in which white officers can be heard saying they were carrying out proactive patrols because of "gang and knife crime".
Scotland Yard said the stop was a result of an officer having “incorrectly entered” the car’s registration plate into a computer to wrongly identify it as a vehicle registered to Yorkshire, but did not explain why the search was carried out in the first place.
She said: “In the light of Black Lives Matter, what we are trying to do is dismantle the structural racism that takes place.
"MacPherson [report author] said that the Met Police is institutionally racist. Cressida Dick doesn't like that term - that is not something that she should be saying.
"What she should be saying is 'I lead an organisation that is still institutionally racist after 20 years, I need to stop that. I need to cut that institutional racism out of the Met force and will do whatever it takes'.
"That is what she should be saying... and that is what she is not saying."
The MP, who was the passenger in the car, also shut down claims that the driver of the car was white.
Good morning twitter I see the racist trolls are going crazy with conspiracy theories. Someone who claims to be an ex police officer is challenging me to a debate. No need waste my time as I'm speaking to current police officers. Working together to make the system better.— Dawn Butler MP✊🏾 (@DawnButlerBrent)August 10, 2020
After details of the incident emerged, some Twitter users claimed that Ms Butler had flipped her camera to make it look as though she was the driver of the car. Some also said she had blurred out the driver's face because he is white.
Insisting she did not flip the camera and confirming that her friend is black, Ms Butler said: "It was quite interesting to go onto Twitter late last night and then start seeing all these sort of conspiracy theories.
"And it just made me think... the length that people will go to just to excuse racism away, or discrimination away, or injustice away."
Ms Butler had earlier told Channel Four News that there was "no other reason" for being stopped "apart from the colour of our skin and we were driving a nice car.”
In footage of the incident, she told the officers: “It is really quite irritating. It’s like you cannot drive around and enjoy a Sunday afternoon whilst black, because you’re going to be stopped by police.”
The Met has come under pressure in recent months over a series of incidents that have led to racial profiling accusations.
The most high profile was a stop involving Team GB athlete Bianca Williams and her partner , who were asked to get out of their car while their small child sat on the back seat, has been referred to police watchdog, the Independent Office for Police Conduct.
Chief Superintendent Roy Smith has told The Times he has spoken to Ms Butler about Sunday's incident, and that she gave him a "balanced account" of the incident.
Scotland Yard’s statement said on the incident said: “Prior to stopping the vehicle, an officer incorrectly entered the registration into a police computer which identified the car as registered to an address in Yorkshire.
“Upon stopping the vehicle and speaking with the driver, it quickly became apparent that the registration had been entered incorrectly and was registered to the driver in London.
“Once the mistake was realised the officer sought to explain this to the occupants, they were then allowed on their way.”
This week Ms Butler was named by Vogue magazine as one of the 25 most influential women shaping 2020 for her support of Black Lives Matter protests .
She described her backing of the anti-racism movement as having led to threats of attack on her office and staff having “drastically escalated”.
The Standard has contacted the Metropolitan Police for comment.