The commission said that it had concerns that Oxfam might not have "fully and frankly disclosed material details" about the allegations in 2011 and had questions about the charity’s handling of the incident since then.
Further details about the scope of the inquiry would be made public in the coming days, the regulator said. It would also ensure the actions the commission required of Oxfam in 2017 on its safeguarding culture and practices were properly and fully carried out.
David Holdsworth, deputy chief executive of the commission, said: "Charities and dedicated, hard-working aid workers undertake vital, life-saving work in some of the most difficult circumstances across the world. However, the issues revealed in recent days are shocking and unacceptable. It is important that we take this urgent step to ensure that these matters can be dealt with fully and robustly."
On Monday afternoon, Helen Stephenson, chief executive of the commission, met Penny Mordaunt, the Secretary of State for International Development, to discuss the Oxfam case. They agreed that charities needed to do more to ensure high standards of safeguarding and set the right culture, the commission said.
The commission said that it would be calling be calling key international aid charities to a summit on safeguarding in the coming weeks.
It added in a statement: "It is vital that trustees set a culture within their charity that prioritises safeguarding so that it is safe for those affected to come forward and report incidents and concerns with the assurance they will be handled sensitively and properly by charities."