Spectators at the Wembley Arena shouted abuse and jeered at players from China, South Korea and Indonesia when they deliberately sprayed shots and duffed serves into the net to concede points in attempts to lose on purpose.
Forced to act on the matter, the Badminton World Federation launched a probe as the whole tournament was plunged into turmoil.
"We will have a real discussion tonight to see what has happened," Paisan Rangsikitpho, a technical delegate at the tournament, told Reuters at Wembley Arena.
"If it's true what I hear, this is a shame and I don't like it. And I'm not going to accept anything that I don't like at all. It's not in a good spirit.
"It is (embarrassing) at the Games. I apologise to the public, I apologise for everyone and I am not happy. If we have to stay up all night, we will have a serious meeting."
South Korea head coach Sung Han-kook admitted two of his pairings had attempted to throw their matches against China's world champion duo and an Indonesian team, but said it was in retaliation against the Chinese team who instigated the farce.
He said they had deliberately tried to throw the first of the tainted matches to ensure their leading duo of Yu Yang and Wang Xiaoli would be sure not to meet China's number two pair until the gold medal decider.
"The Chinese started this. They did it first," Sung told reporters through an interpreter. "It's a complicated thing with the draws. They didn't want to meet each other in the semi-final.
"So we did the same. We didn't want to play the South Korean team again (in the knockout)," he said.
As it panned out, China's Yu and Wang ended up losing to South Korea's Jung Kyung-eun and Kim Ha-na 21-14 21-11 after a tournament referee warned both teams that they could be disqualified.
The first game's longest rally was four shots.
Players were jeered as they left the arena, with the result putting Yu and Wang on the other side of the draw of their Chinese opponents.
China's long-serving head coach Li Yongbo denied anything was amiss when cornered by Reuters at the venue. "This is nothing. It was just a game," said Li with a chuckle as he walked off, declining to comment further.
Yu, who won doubles gold at the Beijing Games with partner Du Jing, claimed she and her team-mate had eased off to conserve their strength for the knockout rounds.
"Actually these opponents really were strong. This is the first time we've played them and tomorrow it's the knockout rounds, so we've already qualified and we wanted to have more energy for the knockout rounds," she told Reuters.
"Really, it's not necessary to go out hard again when the knockout rounds are tomorrow."
Boos again rang out from the crowd later in the evening session as the match between South Korean pair of Ha Jung-eun and Kim Min-jing and Indonesian pair Greysia Polii and Meiliana Jauhari repeated the same farcical scenario.
With spectators yelling "get off", another tournament referee emerged and waved a black card, indicating both teams were disqualified, prompting a roar of approval from the stands.
However, the referee rescinded the decision moments later after coaches from both teams implored the contest to be allowed to continue, and South Korea's Ha and Kim ended up as reluctant winners in three sets over the Indonesians.
The BBC quoted an IOC spokesman as saying: "The federation has a huge experience in refereeing their sport and we have every confidence that they will deal with the issue appropriately and take any necessary measures."
Players and coaches of other teams expressed disdain and laid the blame on the Chinese camp.
"It's because of those Chinese...," a Taiwan team coach who declined to be identified told Reuters.
Bulgarian singles player Alesia Zaitsave said China regularly manipulated results to avoid playing each other.
"They did so many times last year, they did not play between each other like 20 matches. They do what they want."
Germany men's singles player Marc Zwiebler said the South Korean team had manipulated their matches in the 2008 Thomas Cup in which national teams compete.
"Against England, they wanted to get second in their group, so all the doubles players played singles and the singles players played doubles and they were just laughing on the court and let England win," Zwiebler said.
"So England finished top of the group and had to play a stronger team."
China's head coach Li told one of his women's singles players to throw her semi-final match at the Athens Games to allow her tea- mate Zhang Ning to be fresher for the final against Dutchwoman Mia Audina. Zhang duly won the gold.
"If it was the case they wanted to purposefully lose, then it's a big shame... It's absolutely stupid and shameful sport, basically," Zwieber added.
"I can understand the motives but that they have the guts to actually stand in a crowded hall and put such shame in the game, it's such a bad image of badminton."
Organisers released the draw later on Tuesday, with all of the teams involved listed in the quarter-finals.