The case of a millionaire rapist living in the community under a publicly funded scheme will be reviewed by Home Secretary Charles Clarke.
Hoare is understood to have been released under a life licence
The Sun newspaper said the government has spent £10,000 a month to protect the identity of Iorworth Hoare, 52, since his release in March.
Mr Clarke said he would study the case and the "broader issues" raised.
Hoare, from Leeds but said by the Sun to be living in Sunderland, won £7m on Lotto Extra while on temporary release.
Mr Clarke said measures to manage and monitor serious offenders were "robust", but added the newspaper article had "highlighted a number of important issues".
"I fully understand the concerns that have been raised by this case and want to examine how this and similar cases are managed and financed to decide whether any changes are necessary," he said.
The Home Office would not say how much money had been spent on Hoare and would not confirm the probation scheme under which he had been released.
But newly-released serious sex offenders are often dealt with by the Multi-Agency Public Protection Arrangement (MAPPA).
Under MAPPA offenders can be housed in supervised accommodation, visited regularly by probation officers, monitored by police and information about them given to schools and employers.
A Home Office spokesman stressed that MAPPA has no provision for identity protection and said that under the scheme released prisoners are obliged to contribute to their upkeep.
Around 1,400 people in England and Wales are currently living under MAPPA supervision.
The Sun's managing editor Graham Dudman told BBC News it was "outrageous" that the British taxpayer had to pay for Hoare to be put up in "safe houses" and fed when he had £7m in the bank.
Reporters who discovered Hoare said he lived in a red-brick semi-detached Sunderland house and spent much of his time buying art and antiques.
The paper pictured Hoare with grey hair, blue jeans, trainers and a grey jacket.
Hoare won the jackpot in August last year while on temporary release from prison.
He had been serving life after being jailed in Leeds for attempting to rape a 59-year-old teacher in 1989.
Hoare was also jailed several times for a string of sex attacks, including rape, two attempted rapes and three indecent assaults, during the 1970s and 1980s.
He is understood to have been released from Shepton Mallet prison in Somerset on strict conditions under a life licence.
North East Conservative MEP Martin Callanan is calling on the Home Office to withdraw Hoare's protection "and let him protect himself".
He said: "This is totally appalling. Someone who is so wealthy should have no need for state protection.
"If he doesn't feel safe in this country I am sure he could leave and no-one would shed any tears."
Harry Fletcher, the general secretary of probation union Napo, urged ministers to consider means-testing offenders who need supervision and protection.
Wearside Women In Need director Clare Phillipson said she was "delighted" Hoare's identity had been exposed.
"Too often the criminal justice system protects the offenders and I do not believe that is what the public wants."