A man who filmed himself having sex with a fellow cadet at the Australian Defence Force Academy could be expelled.
An unnamed 18-year-old female from the academy says she was filmed having sex with the man and this was broadcast to other cadets via webcam.
The woman told the Ten Network of the incident.
"I engaged with sexual intercourse with another first year at ADFA," she said.
The man had set up a live webcam, which others were watching, she said.
The unnamed woman said still photos were also taken.
"These were then distributed to other people," she said.
"You see it on the TV and you read it in the papers that these things happen but until it happens to you, you don't actually believe that these things happen."
Academy chief Bruce Kafer said an investigation had begun.
"If the perpetrators or those alleged to have been involved are found guilty of a crime, this could result in termination of their military careers," Commodore Kafer said.
Because the college is on federal land the federal police will be involved in the investigation.
Soon after the incident photos began circulating around the academy.
"In those circumstances I can't think of a greater betrayal of trust of a colleague in the workplace than the suggestions that have been made," Defence Minister Stephen Smith told reporters.
"Once that trust is destroyed then it is very difficult if not impossible for the person who has broken that trust to remain a defence force personnel member."
Mr Smith refused to buy into the details of the case, saying a police investigation was under way alongside an internal defence inquiry.
The woman involved could also face disciplinary procedures for breaking so-called fraternising rules and going public with the scandal.
Mr Smith said that was entirely a matter for Defence.
Mr Smith said he had asked defence chief Angus Houston to inquire into allegations the woman had been vilified since coming forward.
He called on all ADF personnel to treat her with "civility and dignity".
"As a general proposition I believe any vilification of a member of the defence force is inappropriate."