Home Secretary David Blunkett has ordered an inquiry into how the vetting system failed to stop Ian Huntley getting a job as a school caretaker.
The prosecution described Huntley as "quite merciless"
The move comes after Huntley was convicted of murdering Soham 10-year-olds Holly Wells and Jessica Chapman.
It emerged social services had looked into four separate complaints he had sex with underage girls and an alleged indecent assault on a 10-year-old.
Mr Blunkett said it had been a
"horrific" case, with real concerns about the checks on Huntley's past.
A separate police review and a case review by social services involved with Huntley in the past were also announced.
The three inquiries will focus on:
- Effectiveness of intelligence and vetting by Cambridgeshire and Humberside forces into previous allegations against Huntley
Findings of a Metropolitan Police review into the early part of the Soham criminal investigation by Cambridgeshire Police
Case review into how agencies in north-east Lincolnshire fulfilled their duties to protect children.
Announcing the vetting inquiry, the home secretary said his thoughts were with the girls' families.
"I cannot begin to imagine the pain they must have endured during this dark time," he said.
"I hope they will find some comfort in seeing the man responsible for this wicked act brought to justice.
"Real concerns exist, however, about the way in which police intelligence about Huntley's past was handled.
"I am determined that we should uncover the full facts through this independent inquiry.
"The inquiry will be conducted speedily to minimise the distress to the two families and ensure that any lessons which need to be learned can be done so quickly."
Social services review
Mr Blunkett also asked Her Majesty's Inspectorate of Constabulary to consider the findings of a review into the Cambridgeshire force's conduct of the early part of the murder investigation.
North East Lincolnshire Social Services will review how they fulfilled their duties to protect children, after it emerged they received complaints of underage sexual relations against Huntley in the 1990s.
They said none of the victims wanted to make a formal complaint, so there was nothing they could do against him.
There were also three allegations of rape against Huntley. One resulted in a charge, in May 1998, but the case never came to court as the CPS was not hopeful of a conviction and dropped it.
He was also charged with a burglary, although the case was dropped when it came to court, and Huntley emerged from all of this without a conviction.
Thorough police checks are designed to prevent any unsuitable people from working with children.
But despite the claims against him, Huntley was given the all-clear to work at the girls' school.
Dr Carole Easton, chief executive of the charity ChildLine, said the failure to identify Huntley's history of sex crime allegations "beggared belief".
"It is incomprehensible that this man, who was known to the CPS, police and local authorities, should have ended up working in a school, in a position of trust."
There were also intelligence system flaws at Humberside Police, where vital information on suspects was routinely discarded because senior officers had misinterpreted the Data Protection Act.
Staff responsible for vetting such school job applications were also not able to access a database with information about sex offences and children.
Chris Fox, president of the Association of Chief Police Officers, welcomed the inquiry but said: "Whatever the exact circumstances of this particular case, it is clear that there are differing interpretations of what is required, by different agencies."
He described the "contradictory" nature of the need to rehabilitate offenders against the need to protect vulnerable people such as children by assessing "the character of those in contact with such groups".
"We very much hope the inquiry will clarify the way in which the balance between these competing interests should be achieved."
He added new arrangements were in place for such vetting requests, with national intelligence gathering and new technology allowing forces to deal with the "vast amount" of data involved.
Soham area MP and Conservative shadow police minister, James Paice, said the inquiry needed to "sensitively and quickly" establish how Huntley had gained approval for his job.
"The families can at least take some solace in the fact that the evil which took Holly and Jessica away from them will be behind bars for a very long time," he said. "Only now can they begin to rebuild their lives."
BBC One's Real Story Soham special will be broadcast on Wednesday 17 December at 2100 GMT.