Scotland Yard has announced it will investigate whether "criminal activity has taken place" following allegations against ex-Lib Dem chief executive Lord Rennard.
Several women have accused the peer of inappropriately touching and propositioning female party workers, which he strenuously denies.
The news of police involvement comes as pressure continues to mount on Lib Dem leader Nick Clegg, with party president Tim Farron admitting it "screwed up" its response to the allegations.
After initial denials that he was aware of complaints made by a number of women about Lord Rennard, Mr Clegg confirmed on Sunday his office had heard "indirect and non-specific concerns" as far back as 2008 and had taken action at the time.
Speaking on Monday, he said: "Until last week, no very specific allegations were put to me.
"We acted on general concerns which had been expressed sometime ago but, of course, now that those general concerns have evolved into specific allegations, we can act and we will."
He added: "I have got nothing to hide, the party has nothing to hide ... I totally understand people have got lots and lots of questions but I hope I have given a full, frank, honest account.
"I happen to know some of these women very well. One of them worked for me. I spoke to her just last night. She never, ever said anything about this until now."
On Tuesday morning Mr Clegg said the police must be allowed to do their job and insisted he would not provide a "running commentary" on the allegations.
Speaking outside his home in south west London, he told Sky News: "I understand there are many people who appear to want to act as self-appointed detectives trying to piece together events that happened many years ago but the only way that we are going to get to the bottom of the truth ... is by allowing the two investigations that I established immediately after the Channel 4 broadcast to do their job and, indeed, to allow the police, whom we have now approached, to do their job as well."
Responding to the police investigation, the party's deputy leader Simon Hughes told Sky News: "We don't want there to be any no-go areas. If there are things that are criminal they need to be pursued."
A Scotland Yard spokesman said: "The Metropolitan Police Special Investigations Command has been approached by officials in the Liberal Democrat Party and is working with them to ascertain whether or not criminal activity has taken place."
The Lib Dems earlier announced that criminal lawyer Alistair Webster QC will lead a formal internal investigation into allegations against Lord Rennard under the party's disciplinary rules.
Mr Webster will lead a panel of four other people, including three women.
The women making the allegations claim they reported Lord Rennard's alleged behaviour to senior party officials at the time, but no further action was taken.
There are now new reports that Mr Clegg's chief of staff Jonny Oates was contacted about detailed allegations back in 2010.
The Telegraph published on its website an exchange of emails in which it listed five allegations and gave dates and locations for the alleged inappropriate acts.
It also said the paper knew the identities of the women concerned and suggested that MPs Jo Swinson and Danny Alexander had been involved in investigations into Lord Rennard's alleged conduct.
Lord Rennard - a key adviser to a succession of Lib Dem leaders before standing down on health grounds in 2009 - has said he is "deeply shocked" by the allegations, which he "strongly disputes" and regards as a "total distortion" of his character.
In a statement on Friday, he said: "I absolutely deny any suggestion of improper touching, nor did I invite a woman to join me in my room.
"I am disappointed and angry that anonymous accusations from several years ago are once again being made public in this manner in a clear attempt to damage my reputation."
Following the allegations, the Lib Dem party slumped into fourth place behind Ukip in a poll conducted by ComRes for the Independent.