Venables, who killed James Bulger in 1993 with Robert Thompson, was recalled to custody last month for breaching the terms of his licence.
Reports have alleged he was found with child sex abuse images on his computer, but ministers have confirmed only that he faces “serious allegations”.
The Parole Board process is likely to take many months. It will not be concluded until the end of any criminal proceed- ings against Venables, which take precedence.
The spokesman said: “The Ministry of Justice has today referred the case of Jon Venables to the Parole Board for us to review his continued detention.”
A three-member Parole Board panel of a judge, a member of the public and a psychologist or psychiatrist will examine Venables’ file.
They will look at his behaviour since his release from prison in 2001, take evidence from probation officers in charge of his case and hear from the Bulger family.
The process will culminate in a hearing at which his case is scrutinised and a decision made on whether he no longer presents a risk to the public and can be let out.