Four staff members at an Australian university are being investigated for mishandling body parts, the university's vice-chancellor said Tuesday.

The University of New South Wales' school of anatomy in Sydney had its license to conduct anatomy classes revoked after an audit revealed remains were sexually interfered with and piled together in coffins.

Fred Hilmer, a professor at the university, said a senior member of the medical faculty had stood aside, one employee had resigned and processes were continuing in relation to two other staff members.

Police are investigating claims about the mistreatment of cadavers, including fondling of breasts and vaginas, and using a head for degrading purposes, Fairfax newspapers reported today.

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The audit also revealed serious problems with labeling and storage of cadavers.

Hilmer said the identities of staff members who came forward last October with allegations about the mishandling of body parts would be protected under the Protected Disclosures Act.

Hilmer said he was taking the issue seriously and the surgical skills laboratory involved in the scandal remained closed.

The university's Deputy Vice-Chancellor Professor Richard Henry said while no formal contact had yet been made to the families of body donors, he did have a message for them.

"We'd like to apologize for any distress those families are suffering at the moment,'' Henry told ABC Radio.

"The difficulty is we are still trying to fully understand what happened.

"We are caught in the balance of not wanting to unnecessarily concern the families and at the same time we don't want to fail to apologize.''

The university was still in the process of identifying which bodies had been involved but once that was done, it would personally contact relatives, he said.

Henry denied that the university had known about the allegations for three years.

Henry said the university had no interest in making the supervisor, who stands accused of overseeing the mislabeling of body parts, or anyone else a scapegoat.

The university planned to upgrade the laboratory, which is used to train surgeons rather than medical students, who use an unrelated facility at the campus, and microchip body parts, he said.

"The university will not reapply for the anatomy license governing the lab until it is satisfied that all of these issues have been addressed.''

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