The Welsh Rugby Union said that Howley had “returned to Wales to assist with an investigation in relation to a potential breach of World Rugby regulation 6, specifically betting on rugby union”.
The 48-year-old former Wales captain has been part of Warren Gatland’s coaching team since 2008.
It is understood that he has already arrived back in Britain after leaving Wales’ current World Cup squad base in the southern Japanese city of Kitakyushu.
Former Wales stand-off Stephen Jones, who was due to succeed Howley as attack specialist after the tournament, will join the squad later this week.
Wales’ opening World Cup game is against Georgia on Monday, with their campaign now off to the worst possible start.
In a statement, the WRU said: “The WRU can confirm that Rob Howley has returned to Wales to assist with an investigation in relation to a potential breach of World Rugby regulation 6, specifically betting on rugby union.
“The decision was taken to act immediately in light of recent information passed to the WRU.
“No further details can be provided at this stage as this would prejudice the investigation. If required, an independent panel will be appointed to hear the case.
“Rob has co-operated fully with our initial discussions, and we would ask that the media appreciate this is a difficult and personal matter for Rob and that his privacy is respected before an outcome is reached.
“Warren Gatland has consulted with senior players, and Stephen Jones will be arriving in Japan imminently to link up with the squad as attack coach.”
If found guilty, Howley could face the maximum sanction of a life ban from the sport, with betting on any rugby game outlawed for the likes of players, coaches and match officials, among others.
It is thought that the WRU will lead the investigation, with the potential for a disciplinary hearing.
The developments will send shock-waves reverberating throughout the rugby world.
Howley enjoyed a glittering playing career, making 59 appearances for Wales and captaining his country on 22 occasions, while also helping Wasps to European glory in 2004. He had previously played for Bridgend and Cardiff.
He also toured twice as a player with the British and Irish Lions and was part of the Lions coaching staff on the three successive tours from 2009 to 2017.
He also coached Wales to the 2013 Six Nations title when Gatland was preparing for the Lions tour to Australia later that year.
He had been due to leave his Wales coaching role after the World Cup, along with Gatland and fellow assistants Shaun Edwards and Robin McBryde.
He was recently linked with succeeding Conor O’Shea as Italy head coach following the tournament, but he now faces a battle to salvage his coaching career and his reputation.