The Department of Health (DoH) is to investigate the decision to appoint Sir Jimmy Savile as head of a taskforce overseeing Broadmoor hospital in 1988.
It comes after the Sun reported claims he abused a 17-year-old patient on a visit to the psychiatric hospital in Berkshire as a fundraiser in the 1970s.
The DoH said the entertainer should not have been appointed.
Police have 340 lines of inquiry into sex abuse claims while the BBC is holding two inquiries.
'Hindsight'The DoH has said it is to look at the role it had in appointing Savile to his post at Broadmoor. At the time it had responsibility for running the high security hospital but West London Mental Health NHS Trust has run the hospital since 2001.
A DoH spokesman said: "We will investigate the Department of Health's conduct in apparently appointing Savile to this role.
"Although the framework for child protection and safeguarding for Broadmoor and other special hospital patients changed radically in 1999, we of course want to establish the circumstances and see if any lessons can be learned.
"In hindsight he should very obviously not have been appointed. Had anyone involved in the appointment been aware of allegations of abuse against Savile, we would not have expected him to have been appointed."
The Guardian reported that Savile's appointment came after the hospital's management board was dismissed by then health secretary Ken Clarke.
However, Mr Clarke's special adviser said the Conservative MP, who was made health secretary in July 1988, had no recollection of this, and the appointment may not have been made when he was in his post.
A DoH spokesman, also quoted in the Guardian, said: "It is far from clear why any such role would have required possession of… a set of keys, we need to establish how he came to have them and on what basis."
The first BBC inquiry is into why a BBC Newsnight investigation into Savile, who died in October last year aged 84, was shelved last year. It will start straight away.
The other into whether culture and practice at the BBC at the time enabled Savile to carry out the sexual abuse of children will wait for police go-ahead.
Director general George Entwistle said the inquiries - commissioned by the BBC Executive Board - would be chaired by independent external experts, whose names would be announced next week.
Mr Entwistle also made an apology to the victims, adding: "The BBC will not avoid confronting the events of its past to understand what happened and to try to ensure that nothing of this kind can happen ever again at the BBC. "
'Absolutely impossible'He also announced a third strand to the inquiries which will relate to sexual harassment at the BBC.
"Next week I will have news about how we will deal with allegations of sexual harassment. I will give you more details of this as soon as I have them. I remain confident our existing policies are working effectively to deal with any such problems today," he said.
Meanwhile, Conservative MP Rob Wilson said he written to the director general calling for an independent public inquiry into the dropping of Newsnight's investigation into Savile.
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But in an interview on BBC Radio 4's Today Programme on Saturday, Sir Christopher Bland, chairman of the BBC board of governors from 1996 to 2001, said: "The rules of the BBC, the editorial independence... are so strong that the idea that the programme was pulled because of intervention from on high is, I believe, absolutely impossible, but that has to be confirmed."
The Metropolitan Police said it was now in contact with 40 potential victims of Savile and continued to liaise with 14 police forces. The Met has officially recorded 12 allegations of sexual offences but expects this number to grow.
In a separate development the University of Bedfordshire said Savile's honorary award from the University of Bedfordshire would be rescinded.
In a statement, the university said the award was made in 2009 "in recognition of his charitable fundraising" and was given "in good faith... without the knowledge of the current very serious allegations".
The BBC has learned some of the women making abuse claims may seek compensation from the BBC and from Stoke Mandeville Hospital.
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Child abuse lawyer Liz Dux explains the grounds for a compensation case
Child abuse lawyer Liz Dux, who said she had been contacted by several of the women in the past few days, said: "The case would be against the BBC or the hospital because essentially they would be held vicariously liable in law for the acts of someone like Savile who was acting as their agent.
"That's particularly the case where they might have had suspicions about what was going on. Their duty of care is heightened if there was that degree of foreseeability."
The BBC said it would not be able to comment on the claims while the police investigation was ongoing.
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