Oxfam has agreed to stop bidding for United Kingdom government funding until it can show it meets the "high standards" required, ministers say.
It has also agreed not to bid for any new state funding until Britain's government is satisfied the charity meets appropriate ethical standards.
The charity has faced criticism over its handling of claims that staff hired prostitutes in earthquake-stricken Haiti in 2011.
"We are going to create a vetting system", Winnie Byanyima, executive director of Oxfam International, told the BBC.
"Devastated for the women who were used by people sent there to help them [and] devastated by the response of an organisation that I have been raising awareness for since I was 9 years old".
At home and overseas, we will not stand for any kind of harassment of staff, partners, volunteers or those we serve and we are doubling the number of people who work on safeguarding to make sure we are living up to our responsibility to protect them.
Allegations grew after senior aide workers were accused of paying for prostitutes and downloading pornography while helping the Haiti 2010 effort.
South African Nobel laureate Desmond Tutu, British actress Minnie Driver and Senegalese musician Baaba Maal have all resigned as Oxfam celebrity ambassadors in the wake of the sexual misconduct allegations and Britain's charity regulator has launched an investigation.
"What happened in Haiti and afterwards is a stain on Oxfam that will shame us for years, and rightly so", Byanyima said.
In a statement, Oxfam says that hiring van Hauwermeiren was a "serious error" and "should never have happened".
OXFAM has agreed not to bid for more taxpayer cash, the global development secretary has said.
"This was with an honourable, mature woman, who was not an natural disaster victim nor a prostitute".
A charity shop worker from Hanley, who asked not to be named, said: "I think it's bad, I most certainly will not be going into their charity shop in Leek".
In comments to reporters at the newspaper Het Nieuwsblad, who tracked him down in an unidentified town on the Belgian coast, Van Hauwermeiren said there were "lots of lies and exaggerations" in media reports.
He said: "I don't think (Oxfam) wanted to promote a sensation and damage the delivery of that programme".
Apologising for the scandal yesterday, worldwide Oxfam boss Winnie Byanyima promised to root out wrongdoing and provide justice for anyone abused by its staff.
It has until February 26 to satisfy the demands.
The charity on Friday said it was also investigating allegations of sexual misconduct at a hotel in the Philippines after a destructive typhoon in 2013.
And speaking on Question Time on Thursday night former Cabinet minister said the Government "should have asked more questions" of Oxfam after misconduct allegations against aid workers in 2011.
"As an organisation, we are ashamed by the actions of some of our staff and are more committed now than ever to learn from our mistakes and ensure we uphold the highest levels of safeguarding standards in our work around the world".
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