Save the Children is to suspend bidding for cash from the taxpayer in the wake of the aid worker sex scandal.
Chief executive Kevin Watkins said the charity has volunteered to withdraw temporarily from applying for new funding from the Department for International Development (DfID).
Mr Watkins said he was "heartbroken" at the suspension which will continue until the organisation can meet the "high standards" expected.
Oxfam has also had its DfID funding suspended after the charity was accused of covering up claims that staff used prostitutes while delivering aid to disaster-stricken Haiti in 2011.
The latest move follows the launch of a Charity Commission inquiry into the handling of sexual harassment allegations against two senior Save the Children executives in 2012 and 2015.
Mr Watkins said the reporting of the incidents made his "stomach churn" and that he was fully committed to putting in place the changes that were needed.
"I am heartbroken that we have to scale back our work in areas that we could be, with DfID, driving an agenda that would make a difference to some of the world's poorest children," he told BBC Radio 4's The World at One.
"I am absolutely committed to building an organisational culture that protects and safeguards the extraordinary people who work across our organisation.
"They have a right to be protected. I find what happened abhorrent and unacceptable."
In a letter to International Development Secretary Penny Mordaunt, Mr Watkins said: "While I greatly regret both the circumstances that have brought us to this juncture and the consequences for children, I fully recognise our responsibility to meet the high standards that you rightly expect.
"I want to underscore how seriously we take the sexual harassment cases reported at our headquarters in 2012 and 2015.
"We are co-operating fully with the Charity Commission's inquiry to ensure that a complete and truthful account of these cases emerges."
The announcement comes one week after Save the Children's international chairman, Sir Alan Parker, quit his role.
The charity apologised earlier this year to women employees who complained of inappropriate behaviour by former chief executive Justin Forsyth.
A leaked 2015 report suggested that Sir Alan's "very close" relationship with Mr Forsyth, who left the charity in 2016, may have affected how he responded to complaints.
The offer to withdraw from bidding for taxpayer funding was accepted by Ms Mordaunt.
In a statement, she said: "Following the launch of a statutory inquiry by the Charity Commission, Save the Children UK has decided to withdraw from bidding for new UK Government funding until DfID is satisfied that they can meet the high standards we expect of all our partners.
"I am committed to driving up standards across the aid sector and I expect every organisation that we work with to have rigorous reporting and complaints mechanisms in place to protect beneficiaries and employees alike."