New Zealand high court judge Justice Lowell Goddard has been named as the latest chair of the troubled child abuse inquiry.
Home Secretary Theresa May said in a statement to MPs that a new statutory inquiry will be established, meaning the current panel will be dissolved.
Current members have been encouraged to reapply for their roles, and the panel has been asked to produce a report on its work so far.
The terms of reference are also being looked at, meaning that the investigations could potentially go back beyond 1970.
However, Mrs May suggested the remit is unlikely to be extended beyond England and Wales
The Home Secretary said she was "more determined than ever" to expose those who had failed victims, and thanked survivors "for their patience, their determination and their willingness to help us get this right".
The first chair of the inquiry was Baroness Butler-Sloss, who stood down in July amid questions over the role of her late brother, Lord Havers, who was attorney general in the 1980s.
Her replacement, Dame Fiona Woolf, resigned after criticism of her links to the establishment, most notably in relation to former home secretary Leon Brittan, who died last month.
The inquiry will be put on a statutory footing under the 2005 Inquiries Act, Mrs May confirmed, with the power to compel witnesses to give evidence.
Mrs May said she had spoken with many victims since making her last statement on the issue, and that she was "grateful to all of them" for speaking out.
"I am now more determined than ever to expose the people behind these despicable crimes and the people in institutions that knew about abuse but didn't act, that failed to help when it was their duty, sometimes their very purpose to do so," she said.
"And the people and institutions that in some cases positively covered up evidence of abuse."
While Mrs May conceded "not every survivor" would agree with what has been announced, she said there was a great deal of consensus on what the inquiry needed.
Mrs May also confirmed that a previously top-secret file containing allegations of "unnatural sexual behaviour", that named the late British diplomat Sir Peter Hayman, was not seen by a probe into the Home Office's handling of historic sex abuse claims.
She said the Cabinet Office file was similar to a Home Office file that was examined by the review, but confirmed it had additional information.
Labour MP Simon Danczuk, who has been campaigning on the issue, told Sky News he welcomed the appointment of Justice Goddard and said it "looks like a good appointment".
Alison Millar, from the law firm Leigh Day, which is representing some of the victims, said: "We are very pleased to see that the inquiry will have a much wider remit and the power to compel witnesses to give evidence.
"Clearly a lot of thought has gone into the choice of chairperson and it is a brave step by the Home Secretary to appoint a non-UK based judge to oversee this essential inquiry."
Ben Emmerson QC will continue as the inquiry's legal counsel. Reacting to the appointment, he said: "Justice Goddard has all the key qualities necessary to lead the Inquiry's work - absolute independence from the executive, a proven track record of holding state and non-state institutions to account, and the forensic skills necessary to digest and analyse vast quantities of evidence."
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