"Unless you report every serious incident or allegation, no matter how damaging to your reputation -- we cannot be partners," Britain's International Development Secretary Penny Mordaunt told a conference in Stockholm, according to extracts of her speech released by her ministry.
"The same message goes out to any organisation or partner which receives UK aid. We want procedures to change. We want leaders to lead with moral authority and we want staff to be held accountable," she said.
"Sexual abuse and exploitation is an issue the entire development sector needs to confront," Mordaunt said, calling for a culture that "ensures victims and whistleblowers can come forward without fear".
When abuse is carried out "by people in positions of power, people we entrust to help and protect, it rightly sickens and disgusts and compels us to take action," she said.
The scandal has led to the resignation of Oxfam's deputy head and has thrown into question government funding for the charity, which amounted to around 32 million (36 million euros, $44 million) last year.
The allegations revolve around Oxfam's then head of mission in Haiti, Belgian national Roland van Hauwermeiren, whose behaviour had already led to complaints when he worked for the charity in Chad.
After resigning from Oxfam, he went on to work for French charity Action Against Hunger in Bangladesh.
There were reports on Wednesday that there had already been complaints about van Hauwermeiren and his use of prostitutes when he was working for the British medical charity Merlin in Liberia before joining Oxfam.
When she saw an initial report about van Hauwermeiren in The Times last week, she remembered thinking: "Oh my God, he's been doing this for 14 years."
"He just goes around the system... from Liberia to Chad, to Haiti, to Bangladesh. Someone should have checked properly," Malik Miller was quoted as saying.
She said van Hauwermeiren and other staff members were "shameless" and she was suspicious that some of the sex workers had been underage, adding: "They acted like it was the most normal thing in the world".
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