The Indian government has ordered a judicial investigation into claims that Foreign Minister Natwar Singh benefited from the Iraq UN oil-for-food scandal.
Natwar Singh says he is shocked by the UN charge
On Sunday it appointed a former Indian envoy to the UN, Virendra Dayal, to gather information about the charges.
Mr Singh has been backed by the PM and says he has no plans to resign.
Natwar Singh and the main party in India's ruling coalition, Congress, were both named in a UN report into the scandal. Both deny any wrongdoing.
The judicial investigation will be headed by a retired Indian chief justice, RS Pathak, who is also a former judge of the International Court of Justice.
"The scope of the inquiry and terms of reference will be announced shortly," Sanjaya Baru, a spokesman for Prime Minister Manmohan Singh, told reporters.
On Sunday, he said Mr Dayal had been appointed "as a special envoy of the government of India to liaise with UN and member states... to gather relevant material regarding the involvement of Indian entities".
"The government of India is also contemplating other steps which will also be announced shortly," Mr Baru added.
The UN report, published last Thursday, was written by the former US Federal Reserve chairman, Paul Volcker.
It said more than 2,000 firms made illegal payments to Saddam Hussein's government.
Under the UN programme, Saddam Hussein's government could sell oil as long as the proceeds were used to buy humanitarian goods.
Mr Volcker has dismissed Natwar Singh's claims that he had not been asked for his comments before publication.
On Saturday, Natwar Singh told the NDTV station that he still had the full backing of the prime minister.
Oil-for-food was supposed to ease the burden of sanctions on Iraqis
"I am told that I am doing a good job so do you expect me to go to the prime minister and say that since I am doing a good job I am putting in my papers?" he asked.
"I am dismissing [the Volcker report] here on behalf of the Congress Party and as the foreign minister of India."
Congress party head Sonia Gandhi held talks on Saturday with the prime minister during which they are understood to have discussed the implications of the Volcker report.
Many observers say the foreign minister's position has become increasingly uncertain after the government announced it would investigate the report, which it says does not prove the case against Natwar Singh or Congress.
India's main opposition BJP party says Mr Singh is unfit to stay in office, and has criticised the government's attitude to the UN report.