An inquest will also be held to determine Teoh's cause of death, Prime Minister Datuk Seri Najib Razak told reproters after a Cabinet meeting today.
Teoh, 30 was found dead on the fifth floor of Palaza Masalam in Shah Alam last Thursday after giving his statement to the Selangor MACC which had been investigating allegations that certain state assemblymen had misused constituency funds.
Politicians from both Barisan Nasional (BN) and PR as well as the Bar Council have called for a royal commission to be set up to investigate the circumstances surrounding Teoh'sdeath.
Cabinet approves royal commission
The cabinet today agreed to set up a royal commission to look into the Malaysian Anti-Corruption Commission's investigative procedures and to determine if there were any human right violations when Teoh Beng Hock was being interrogated.
Prime Minister Najib Abdul who chaired the meeting - also revealed that an inquest will be held to determine Teoh's cause of death.
The cabinet also instructed the Home Ministry and the police to wrap up its investigations into the matter as soon as possible.
The findings of the investigation will be made public whereas Najib said he will personally inform the family about it.
Teoh, 30, was the former political secretary to a Selangor exco who was being probed for alleged corruption by the MACC.
He was said to have fallen to his death from the 14th floor of Plaza Masalam, which houses the MACC Selangor office, last Thursday.
His family and friends refuse to believe that Teoh, who was to get married the next day, would take his own life.
The case had received widespread media coverage, with both Barisan Nasional and Pakatan Rakyat politicians calling for a royal commission of inquiry.
He added that in line with the 1Malaysia concept, the cabinet and government institutions are dedicated to providing the best service for the people.
Truth, nothing but the truth
"We want to establish the truth and nothing but the truth... it is important for us to ensure that public faith and confidence in important institutions," Najib expressed.
Asked whether a time-frame has been set for the police to wrap up their investigations and for the formation of the Royal Commission, Najib said:
"I know the police can wrap up investigations very soon. We are talking about a matter of days but the inquest is up to the magistrate to decide. The royal commission will established quite soon.
The prime minister added that the recommendations of the royal commission will be implemented, if they are "consistent with the principles announced".
He also denied reports that MACC officers involved in Teoh's interrogation have been suspended.
"We cannot have a preconceived notion, we have to wait for the results of the investigation.
Officers transfered, not suspended
"They have not been suspended. The lead investigator has been reassigned to the headquarters.
He also clarified that the royal commission's purview is not to determine Teoh's cause of death.
"The cause of death (will be determined) by inquest which is according to Criminal Procedure Code".
"The royal commission will look into the standard operating procedures of MACC.
He stressed that "the process of investigation will be forthright and transparent".
"We regard every human life to be sacrosanct and civil liberties to be valuable."