Mr. Panetta announced the investigation while traveling to Australia for a ministerial meeting.
Gen. Allen had come to Washington for his Senate confirmation hearing as President Obama’s nominee for as supreme allied commander of Europe and NATO commander.
The confirmation has been postponed, according to a statement by Sen. Carl M. Levin, Michigan Democrat and chairman of the Senate Armed Services Committee, and Sen. John McCain of Arizona, the committee’s ranking Republican.
Gen. Allen is scheduled to return Saturday to Kabul, and will retain his current position as U.S. commander of the Afghanistan War.
“His leadership has been instrumental in achieving the significant progress that ISAF, working alongside our Afghan partners, has made in bringing greater security to the Afghan people and in ensuring that Afghanistan never again becomes a safe haven for terrorists. He is entitled to due process in this matter,” Mr. Panetta said in a statement Tuesday.
“The president thinks very highly of Gen. Allen and his service to the country,” White House press secretary Jay Carney told reporters at a briefing. “He has faith in Gen. Allen and believes he is doing an excellent job” in Afghanistan.
Mr. Obama nominated Gen. Joseph F. Dunford Jr. to succeed Gen. Allen in Afghanistan several weeks ago after having picked Gen. Allen for the European post. Gen. Dunford’s hearing is scheduled for Thursday.
The change of command from Gen. Allen to Gen. Dunford “is expected no earlier than March,” said the statement by Sens. Levin and McCain.
But Gen. Allen’s fate remains unknown. An inspector general investigation could take as long as six months, if not more, said an official familiar with the process.
A unit called the Investigation of Senior Officials first will decide whether there is sufficient evidence to proceed and, if so, assign a team of two to three investigators who will collect documents, identify and interview witnesses, and produce a set of findings and a general recommendation in a report to the defense secretary and members of Congress.
After reviewing the report, the defense secretary then would decide what disciplinary action should be taken, if any.
If criminal activity is uncovered during the investigation, the case could be referred to a criminal investigations body, either within the Defense Department or the FBI.
The investigation likely will extend to Afghanistan, where more witnesses and evidence may be found, said the defense official.
The international coalition in Afghanistan is expected to complete its troops drawdown by the end of 2014, leaving a residual force to conduct counterterrorism operations and continue advising and training Afghan forces.