Blatter faces competition in the race for Fifa's presidency
And with the Fifa presidential election on 29 May the move has infuriated Blatter's opponents.
They suspect Blatter is trying to prevent the disclosure of any material that could damage his chances of re-election.
Blatter insisted he was forced into the action to investigate a breach of confidentiality from someone within the investigating committee, which is headed by Scotland's David Will.
All six members of the committee were obliged to sign confidentiality agreements when they were appointed last month.
But in a letter to Will, Blatter explained his reasons for taking the decision.
"In order to guarantee and to protect the interests of Fifa and the Fifa executive committee, I have to suspend the work of the Fifa ad hoc Internal Audit Committee.
"This is pending an investigation into a breach of confidentiality and the way documents, which have been given to the members of the committee, have been handled."
Rival camps
The inquiry team have already held a series of hearings and interviewed senior Fifa management staff, including members of the finance division.
Blatter's opponent in the Fifa presidential campaign is Cameroon's Issa Hayatou.
Fifa have split into rival camps with the Americas backing Blatter, a Swiss lawyer, and Europe and Africa mainly lining up behind Hayatou.
The Hayatou camp have led demands for investigations into Fifa's finances and the handling of the collapse of former marketing partners ISL last year.