Her decision to reopen a case which is more than two years old follows several complaints that the case was improperly handled.
The Further Education Funding Council will take charge of the investigation. It has appointed Professor Howard Newby, vice-chancellor of Southampton University, to head it.
An FEFC spokeswoman said "the council has decided to commission a review of the college's conduct in this matter". The intervention follows two hugely expensive and ultimately abortive disciplinary proceedings against a consultant and a lecturer.
The case prompted an outspoken attack on costly Government quangos by the then Liberal Democrat education spokesman Matthew Taylor, MP for St Austell. He questioned how far governing bodies should be allowed to be judge and jury.
John Patten, the then education secretary, was also asked to investigate the suspension of the accused lecturer. The conclusion of his inquiries satisfied neither party.
The case has a new resonance after publication of guidelines by the Nolan Committee on standards in public life.
Professor Newby will be assisted in his deliberations by Janey Rees, retiring principal of Coventry Technical College. The FEFC has pledged that: "Any lessons to the benefit of the further education sector emerging from the review will be made public."
The council was eager to stress that this was not an inquiry on the same magnitude as the investigation into mismanagement and probity at Derby Wilmorton College.
The committee will examine the grievance procedures applied by St Austell College and assess the extent to which they were reasonable, and how they complied with the provisions of the 1992 Further and Higher Education Act.
They will examine the college's overall investigation and management of the case and recommend any action to be taken or changes to FEFC guidelines on these issues.