Nick Clegg is facing questions over a cover-up after he admitted knowing five years ago that there were concerns about alleged sexual harassment by Lord Rennard.
The Liberal Democrat leader issued a dramatic clarification after days insisting he was unaware of claims before Channel 4 News raised them last week.
In a statement on Sunday night, Mr Clegg said his office had heard "indirect and non-specific concerns" about the then party chief executive's conduct in 2008, and "acted to deal with them".
His chief of staff Danny Alexander - now Chief Secretary to the Treasury - confronted Lord Rennard with the claims and "warned him that any such behaviour was wholly unacceptable".
Mr Clegg continued: "Chris Rennard categorically denied that he had behaved inappropriately and he continues to do so. He subsequently resigned as Chief Executive on health grounds. As my office only received concerns indirectly and anonymously, as those involved understandably wanted to maintain their privacy, there was a limit to how we could take this matter forward following Chris Rennard's resignation."
Lord Rennard - a key party strategist and adviser to a succession of Lib Dem leaders before standing down in 2009 - has said he is "deeply shocked" by the allegations, which he "strongly disputes" and regards as a "total distortion" of his character.
Mr Clegg said it was "critical the claims are investigated thoroughly and dealt with properly and they will be". The Deputy Prime Minister added: "But I would like to make one thing crystal clear. I did not know about these allegations until Channel 4 informed the party of them shortly before they were broadcast. I have today spoken to one of the women in the broadcast who I respect and admire and who confirmed that she had never raised the issue with me.
"I am angry and outraged at the suggestion that I would not have acted if these allegations had been put to me. Indeed, when indirect and non-specific concerns about Chris Rennard's conduct reached my office in 2008, we acted to deal with them."
Mr Clegg conceded there were "legitimate concerns that issues raised with the party were not handled as well as they should have been".
An independently chaired review will be held into Lib Dem procedures and how they were applied at the time, he said. A separate investigation will be carried out into Lord Rennard under the party's disciplinary rules.
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