The Indian Olympic Association on Monday suspended the Indian Hockey Federation and said it will be replaced by an ad-hoc commission, comprising five former Olympians.
The decision, taken at an executive committee meeting in New Delhi, comes in the wake of the sting operation involving IHF secretary K Jothikumaran, who allegedly accepted a bribe to include a player in the senior team.
The IOA announced that the selection commision will be chaired by Aslam Sher Khan and include Olympians Zafar Iqbal, Ashok Kumar, Ajit Pal Singh and Dhanraj Pillay.
Australian legend Ric Charlesworth will be an advisor to the selection panel.
IOA president Suresh Kalmadi, announcing the decision, said it was unanimous.
"Not one person opposed the suggestion to dissolve the IHF," he said. "We have a great responsibility to run the IHF well."
On Sunday, the International Hockey Federation (FIH) had suggested that the Indian Olympic Association should take over management of the game in the country following the bribery scandal.
"Now the IOA has to manage Indian hockey because I don't think we can work with a half-suspended secretary general and a president probably linked because he protects his secretary in this case," FIH chief Els van Breda Vriesman had said.
Vriesman also said India could lose the right to host the 2010 World Cup if it does not clean up its act and implement the FIH project 'Promoting Indian Hockey' launched last year. She added that the television sting operation was a regrettable first for the game.
"It is never heard of in the world of field hockey. I wish Indian hockey gets positive publicity and not this kind," Vriesman said.
"We are in touch with both the International Olympic Committee and the Indian Olympic Association how to proceed in such a situation."
The India men's team, eight-times Olympic champions, were eliminated from the 2008 Games competition, marking the first time they will miss the Olympics since sending their first team in 1928.