But the charity regulator said Oxfam's report stated there had been no allegations of abuse of beneficiaries and did not mention potential sexual crimes involving minors.
'Our approach to this matter would have been different had the full details that have been reported been disclosed to us at the time, ' it said in a statement.
The allegations echo those made against Roland van Hauwermeiren, 68, who admitted to having sex with vulnerable prostitutes at his Oxfam villa in the poverty-stricken country of Haiti where he was based as country director.
It said Oxfam's leaders had "showed a lack of judgment" in their handling of the matter and their level of openness with the government and commission.
"But I don't think it was in anyone's best interest to be describing the details of the behavior in a way that was actually going to draw extreme attention to it when what we wanted to do was get on and deliver an aid program".
Three top workers resigned and another four were sacked over the prostitute claims.
More than 120 workers for British charities were accused of sexual abuse in the past year alone, sparking fears overseas aid organisations are being are being targeted by paedophiles.
'The UN said past year there were 120 cases involving 300 people - and that is just the tip of the iceberg'.
"Moreover we received positive references from former Oxfam staff-in their individual capacities-who worked with him", including from a human resources staffer, a spokesman said.
"Our primary aim was always to root out and take action against those involved and we publicly announced, including to media, both the investigation and the action we took as a result". It is not clear whether anyone from DFID made any attempt to investigate what the "nature of the allegations" was.
The UK now spends £13bn on aid each year and there have always been calls from some Conservative MPs for cuts to this budget.
Labour, the Liberal Democrats, SNP, Greens and Plaid Cymru also agree that figure should remain.
DfID said Oxfam had "serious questions" to answer following the revelations.
He said that it was very important to remember that "there are thousands of people working for Oxfam in some of the most hard places. and we must not forget that Oxfam is one of Britain's most brilliant charities".
"If wrongdoing, abuse, fraud or criminal activity occur we need to know about it immediately, in full".
It is a "complete betrayal of both the people Oxfam were there to help and also the people that sent them there to do that job", Britain's worldwide development secretary, Penny Mordaunt, told BBC News, which noted that the nonprofit received $44 million in government funds previous year.
But he said he could not recall being told about the incident.
'We will continue to address the underlying cultural issues that allowed this behaviour to happen, ' she said.
Mordaunt, speaking to the BBC, said she would meet Oxfam representatives on Monday.