Tesco has confirmed that the UK Serious Fraud Office has launched an investigation into its accounting practices.
This follows the supermarket's discovery of a £263m hole in its profit expectations.
It comes after an investigation by accountants Deloitte and law firm Freshfields found the error was worse than first thought and that the supermarket had been overstating its earnings for years.
The UK's Financial Conduct Authority is already investigating and pay-offs totalling around £2m to retired chief executive Philip Clarke and former finance director Laurie McIlwee have been suspended pending the inquiry.
Releasing a statement in response to media reports, Tesco said the UK's Financial Reporting Council's investigation would now end and be replaced by the SFO probe.
Tesco said it has been cooperating fully with the SFO and would continue to do.
Eight executives including UK managing director Chris Bush have been asked to step aside pending the investigations.
Chairman Richard Broadbent last week said he was preparing to step down to show someone was "carrying the can" for the scandal - which was "a matter of profound regret".
Deloitte's probe into the affair, which involved rebates from suppliers being moved around to different periods on the company's balance sheet, found that it had been going on for years and at least as far back as the 2012/13 period.
New chief executive Dave Lewis tried to draw a line under the episode as he unveiled details of the inquiry while reporting a 92% fall in first half profits and deteriorating sales last week.
But Tesco has now had to re-write its rules on dealing with suppliers in light of the mistakes and said this would have an impact on its second-half performance. It has also warned that the FCA investigation could result in "significant" fines.
The Deloitte probe involved more than six million documents with 18,000 invoices reviewed and 700 scrutinised in detail.
It found a £118m trading profit shortfall related to the latest half-year plus a £70m hit for the previous financial year and £75m for 2012/13.
Tesco first announced last month that it had discovered a problem but initially expected it to result in a £250m overstatement - lower than the sum it eventually calculated.
Details of the probe revealed that, once started, the accounting error seems to have spiralled out of control, as Tesco said "current and prior practices appear to be linked as income pulled forward grew period by period".
But Mr Lewis brushed off any suggestion of fraud, saying that no-one had gained financially from the mistake.
The new boss is trying to turn the performance of the grocer around as it faces sliding sales amid a squeeze on market share from discounters Aldi and Lidl and a price war with its more established rivals.