The Department of Health (DoH) has been dragged into the Jimmy Savile abuse scandal over its decision to appoint him to lead a "taskforce" at Broadmoor, one of the hospitals where the celebrity allegedly abused patients.
The department will carry out an investigation into how the late DJ and broadcaster was appointed to the position while Ken Clarke was health secretary in 1988.
The DoH could be sued by victims as it was running the psychiatric hospital at the time, the Guardian reported.
Mr Clarke, currently a Cabinet minister without portfolio, said: "I have no recollection of ever having met Jimmy Savile and no recollection of these events. The DoH are rightly now investigating to establish the facts."
A spokeswoman for Mr Clarke said that as he only became health secretary in July 1988, Savile's appointment to the role at Broadmoor may have been instigated by someone else.
In a statement, the department 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 DoH was the latest organisation to become embroiled in a scandal that has mushroomed since ITV screened a documentary in which five women alleged they were abused by Savile.
Scotland Yard is pursuing 340 lines of inquiry in the Savile abuse case involving 40 potential victims. So far 12 allegations of sexual offences have been officially recorded but this number is increasing, police said.
Metropolitan Police detectives are in contact with 14 other forces as the number of allegations against the former DJ continues to rise.