The UK's Information Commissioner is to apply to court for a warrant to search the offices of London-based political consulting firm, Cambridge Analytica.
The company is accused of using the personal data of 50 million Facebook members to influence the US presidential election in 2016.
Its executives have also been filmed by Channel 4 News suggesting it could use honey traps and potentially bribery to discredit politicians.
The company denies any wrongdoing.
Meanwhile, Facebook CEO Mark Zuckerberg has been summoned to give evidence about the company's links to Cambridge Analytica to a UK parliamentary committee.
Damian Collins MP, who is leading the committee's inquiry into fake news, accused Facebook of giving answers "misleading to the committee" at a previous hearing which asked whether information had been taken without users' consent.
On Monday, Channel 4 News broadcast hidden camera footage in which Cambridge Analytica chief executive Alexander Nix appears to suggest tactics his company could use to discredit politicians online.
In the footage, asked what "deep digging" could be done, Mr Nix told an undercover reporter: "Oh, we do a lot more than that."
He suggested one way to target an individual was to "offer them a deal that's too good to be true and make sure that's video recorded".
He also said he could "send some girls around to the candidate's house..." adding that Ukrainian girls "are very beautiful, I find that works very well".
Mr Nix continued: "I'm just giving you examples of what can be done and what has been done."
Channel 4 News said its reporter had posed as a fixer for a wealthy client hoping to get a political candidate elected in Sri Lanka.
However, Cambridge Analytica said the report had "grossly misrepresented" the conversations caught on camera.
"In playing along with this line of conversation, and partly to spare our 'client' from embarrassment, we entertained a series of ludicrous hypothetical scenarios," the company said in a statement.
"Cambridge Analytica does not condone or engage in entrapment, bribes or so-called 'honeytraps'," it said.
Mr Nix told the BBC's Newsnight programme that he regarded the report as a "misrepresentation of the facts" and said he felt the firm had been "deliberately entrapped".
On its website, Cambridge Analytica says it can provide data and insights to "drive your voters to the polls and win your campaign" and says it has played a "pivotal role" in winning US presidential races.
UK Information Commissioner Elizabeth Denham is investigating the company over claims it used personal data to influence the US election.
Christopher Wylie, who worked with the company, claimed it amassed the data of millions of people through a personality quiz on Facebook called This is Your Digital Life that was created by an academic.
Ms Denham demanded access to the firm's databases and servers after it missed her Monday deadline.
She said her office has been investigating political campaigning and the use of political data for many months - the allegations against Facebook and Cambridge Analytica were one strand of that work.
She said she was looking at whether personal data was acquired in "an unauthorised way", whether there was sufficient consent to share the data, what was done to safeguard it and whether Facebook acted robustly when they found out about the loss of the data.
She admitted she told Facebook to withdraw from its own search of Cambridge Analytica's offices, saying there were concerns it might damage the integrity of her investigation.
"Our advice to Facebook was to back away - and they agreed," she told BBC Radio 4's Today programme.
Labour's shadow digital economy minister Liam Byrne said Ms Denham's powers did not allow her to apply for a digital search warrant "quickly and quietly".
Instead, she has "told the world she's going to court", giving Cambridge Analytica and others time to hide any evidence, he told the Today programme.
Former attorney general Dominic Grieve said her legal powers were inadequate and this matter had highlighted a need for "greater powers and greater sanctions".
Ms Denham said she was using all the powers she had under the law but would not know whether evidence had been tampered with until her team of forensic experts gained access to the offices.
Cambridge Analytica insists it followed the correct procedures in obtaining and using data, but it was suspended from Facebook last week.
Facebook, meanwhile, will hold an open meeting with its employees later to discuss the matter, tech news website The Verge is reporting.
Facebook said it has hired its own digital forensic team to audit Cambridge Analytica to find out whether the Facebook data in question still exists.
"If this data still exists, it would be a grave violation of Facebook's policies and an unacceptable violation of trust and the commitments these groups made."
Facebook said Aleksandr Kogan, who created the personality app from which the data had been harvested, has agreed to be audited, but Mr Wylie - who made the claims about the way the data was gathered and used - has declined.
How to protect your data on Facebook
There are a few things to be aware of if you want to restrict who has access to your data.
- Keep an eye on apps, especially those which require you to log in using your Facebook account - they often have a very wide range of permissions and many are specifically designed to pick up your data
- Use an ad blocker to limit advertising
- Look at your Facebook security settings and make sure you are aware of what is enabled. Check the individual app settings to see whether you have given them permission to view your friends as well as yourself.
- You can download a copy of the data Facebook holds on you, although it is not comprehensive. There is a download button at the bottom of the General Account Settings tab. However bear in mind that your data may be less secure sitting on your laptop than it is on Facebook's servers, if your device is hacked.
You can of course, simply leave Facebook, but the campaign group Privacy International warns that privacy concerns extend beyond the social network.
"The current focus is on protecting your data being exploited by third parties, but your data is being exploited all the time," said a spokeswoman.
"Many apps on your phone will have permission to access location data, your entire phone book and so on. It is just the tip of the iceberg."