Great Ormond Street Hospital (GOSH) has said it will return all previous donations from the Presidents Club after allegations of sexual harassment at a fundraiser.
The charity intervened after claims female staff at a "male-only" dinner held at the Dorchester Hotel were groped, sexually harassed and propositioned.
Another hospital also announced it would repay all previous donations, while a Government official who sat on the exclusive club's board has resigned.
A Tory minister is now facing questions over his attendance at the event last Thursday.
Foreign Secretary Boris Johnson also denied knowledge of an auction prize involving him and David Walliams, who was MC.
A spokesperson for GOSH confirmed it was handing back all previous donations, saying: "We are shocked to hear of the behaviour reported at the Presidents Club Charitable Trust fundraising dinner. We would never knowingly accept donations raised in this way.
"We have had no involvement in the organisation of this event, nor attended, and we were never due to receive any money from it.
"All monies raised in our name go to support vital work. However, due to the wholly unacceptable nature of the event we are returning previous donations and will no longer accept gifts from the Presidents Club Charitable Trust."
GOSH revealed it received £530,000 from the Presidents Club between 2009 and 2016.
Evelina London Children's Hospital also said it is returning previous donations from the group, saying "this is not the kind of event we would wish to be associated with".
And advertising giant WPP, which sponsored a table at this year's event, announced it will end its association with the Presidents Club.
Details of the dinner were revealed by the Financial Times, with more than 100 female hosts hired to mingle with 360 elite guests from business, finance and politics.
More than £2m was raised for charity through auction items such as lunch with Boris Johnson and tea with Bank of England governor Mark Carney.
But female hosts were allegedly ordered to wear skimpy black outfits with matching underwear and made to sign non-disclosure agreements.
One was told by an attendee she was "far too sober", the FT reported. He then declared: "I want you to down that glass, rip off your knickers and dance on that table."
Labour MP Jess Phillips branded the event a "lady zoo" and has called for "every penny" raised to be donated to children and adult sexual violence services.
Following an urgent question in the Commons from her, it was announced David Meller, a joint chair of the Presidents Club, who is also a non-executive director on the Department for Education board, would resign from his public post.
The new Tory minister for children and families, Nadhim Zahawi, is also facing questions for attending the dinner.
He wrote in a post on Twitter: "I do unequivocally condemn this behaviour. The report is truly shocking. I will never attend a men-only function ever."
Labour's shadow families minister, Emma Lewell-Buck, said she was "absolutely appalled" Mr Zahawi had gone to the "shameful event", asking: "What sort of message does he think that sends out?"
The Charities Commission said it is investigating the reports of harassment and that "the alleged behaviour has no place being taken in the name of charity".
A spokesperson told Sky News: "We are assessing these allegations as a matter of urgency and will be contacting the Presidents Club Charitable Trust."
Comedian David Walliams, who was the main event host, distanced himself from the harassment claims.
"I did not witness any of the kind of behaviour that allegedly occurred and am absolutely appalled by the reports," he said in a post on Twitter.
Organisers of the event said they were "appalled" by allegations of impropriety.
A spokesperson said: "The Presidents Club recently hosted its annual dinner, raising several million pounds for disadvantaged children.
"The organisers are appalled by the allegations of bad behaviour at the event asserted by the Financial Times reporters.
"Such behaviour is totally unacceptable. The allegations will be investigated fully and promptly and appropriate action taken."
The Dorchester insisted it had a zero-tolerance policy to harassment of employees and guests. It said: "We are unaware of any allegations and should we be contacted we will work with the relevant authorities as necessary."
A statement from the Bank of England said: "The Bank of England did not approve any prize for auction on the occasion described nor would it have for that organisation under its guidelines for charitable giving."
Mark Carney added he was "deeply dismayed that an event like the Presidents Club charity gala could take place".
The Department for Education said in a statement: "This charity event was attended in a personal capacity. It was not official departmental business and as such we are unable to comment further."