The cabinet Thursday ordered a commission of inquiry into the alleged snooping of a young woman by the Gujarat Police, allegedly at the behest of then state home minister Amit Shah, informed sources said.
They said the decision was taken at a cabinet meeting presided over by Prime Minister Manmohan Singh.
The inquiry will look into the "physical/electronic surveillance" in Gujarat, Himachal Pradesh and Delhi "allegedly without authorization", an official statement said.
According to the sources, a retired Supreme Court judge may be named to head the commission of inquiry. The announcement is likely to be made in a few days.
Two news portals claimed last month that Shah ordered the illegal surveillance of a woman at the behest of a "saheb", widely believed to be Gujarat Chief Minister Narendra Modi.
The Gujarat government has already ordered a probe into the case. Shah is now in charge of Uttar Pradesh for the Bharatiya Janata Party.
The BJP reacted angrily to the decision, saying the real target was Modi, now the party's prime ministerial candidate.
"The Congress is trying to hit at the principal opposition party's prime ministerial candidate. It is a clear case of political vindictiveness coming into play," spokesman Nirmala Sitharamn said.