The Home Secretary, Priti Patel said ex-Lord Advocate Dame Elish Angiolini QC will be given greater powers if she feels unable to fulfil her remit for the two-part inquiry.
Wayne Couzens used his police issue handcuffs and warrant card to stage a fake arrest so he could kidnap 33-year-old Ms Everard in London in March.
The first part of the inquiry will establish Couzens’ conduct throughout his career in policing, including whether any red flags were missed and allegations made against him were properly handled.
It will draw on ongoing investigations by the Independent Office for Police Conduct and Her Majesty’s Inspectorate of Constabulary and Fire & Rescue Services.
The second par will look at specific issues raised by part one, which will report to the Home Secretary as soon as possible.
Ms Patel, who branded Couzens a “monster”, told MPs: “Sarah Everard’s life was ended too early by an evil man whose job it was to protect her.
“We owe it to her and her loved ones and her family to prevent something like this from ever happening again.”
Dame Elish said in a statement: “I am deeply honoured to have been asked to chair this vital inquiry, which comes at a pivotal moment for policing.
“The murder of Sarah Everard was profoundly shocking and I will ensure that the issues raised from this dreadful tragedy are fully investigated and the necessary lessons learned.”