Oxfam did not give the Charity Commission full details about the use of prostitutes by some of its aid workers in Haiti, the watchdog says.
The charity did tell the regulator it was investigating inappropriate sexual behaviour, bullying, harassment and staff intimidation.
But it says it was not told the specific allegations and took no further action at the time.
The commission says it would have acted differently with all the facts.
Four staff members were dismissed and three quit after the revelations in 2011 and Oxfam denies any cover-up.
The Department for International Development, which gave Oxfam nearly £32m last year, is now reviewing whether to continue funding the charity.
The three workers who resigned, including Oxfam’s country director for Haiti, did so before the charity had finished investigating what happened.
The director was Roland Van Hauwermeiren, who according to the Times, used prostitutes at a villa rented for him by Oxfam.
The staff were in Haiti as part of the relief effort following the devastating magnitude 7.0 earthquake that killed more than 200,000 people there in 2010.
The paper also reports that the charity failed to alert other aid agencies about the staff members’ behaviour, with Mr Van Hauwermeiren going on to work elsewhere in the sector.
Oxfam says it would not have provided a positive reference for any of those who were dismissed or resigned.
The Charity Commission said the alleged behaviour had “absolutely no place in society” and charities needed to be held to the highest of standards.
“Our approach to this matter would have been different had the full details that have been reported been disclosed to us at the time,” it said.
It has written to Oxfam “as a matter of urgency” seeking more information, including a timeline of events, information about when the charity was made aware of specific allegations and the detail of the investigation’s findings and conclusions.
“This information will be considered as part of an ongoing case regarding the charity’s approach to safeguarding,” it added.
The foreign aid debate
By Emma Vardy, BBC political correspondent
Public confidence in the way Britain’s foreign aid money is spent has been undermined by a number of scandals.
DfID will now be under pressure to ensure there is zero tolerance of sexual misconduct within agencies that receive government aid funds.
It is unclear to what extent DfID may have been made aware of the Oxfam incident back in 2011.
Similar cases involving UN peacekeeping soldiers were brought to the attention of the then International Development Secretary Andrew Mitchell.
The UK currently spends £13bn on aid each year and there have long been calls from some Conservative MPs for cuts to this budget.
But Theresa May says she is “proud” of the UK’s record on foreign aid and remains committed to the UK’s requirement to spend 0.7% of the country’s gross national income on overseas assistance.
Labour, the Liberal Democrats, SNP, Greens and Plaid Cymru also agree that figure should remain.
Earlier, Oxfam’s chief executive Mark Goldring told BBC Radio 4’s Today programme Oxfam was ashamed of what it had got wrong but had taken action.
He said the charity did “anything but” cover the incident up, adding: “We were very open with the public that we were ashamed of the behaviour of our staff. We still are.”
However, he admitted a report released by the charity at the time did not give details of the allegations.
The chief executive said: “With hindsight, I would much prefer that we had talked about sexual misconduct.
“But I don’t think it was in anyone’s best interest to be describing the details of the behaviour in a way that was actually going to draw extreme attention to it when what we wanted to do was get on and deliver an aid programme.”
He added: “I am absolutely committed… to wipe out that kind of behaviour from Oxfam and rebuild that relationship of trust [with the public].”
‘Lack of judgement’
A DfID spokesman said the way “appalling abuse of vulnerable people” had been dealt with raised serious questions for Oxfam.
He said the department acknowledged that hundreds of Oxfam staff had done nothing wrong, “but the handling by the senior team about this investigation and their openness with us and the charity commission showed a lack of judgement”.
International Development Secretary Penny Mordaunt had requested a meeting with Oxfam’s senior team “at the earliest opportunity”, the spokesman said.
Andrew Mitchell, who was international development secretary in 2011, told BBC’s Newsnight it was a “shudderingly awful tale” that was “terrible on every single level”.
But he said he could not recall being told about the incident.
Dame Barbara Stocking, who was the head of Oxfam in 2011, told the BBC that the charity had a long record of having a very good code of conduct.
When it happened, she said, new whistle-blowing procedures, safeguarding practises and training were put in place.
She said Oxfam often worked in very difficult locations “where the rule of law isn’t going on”.