The Senior Constable responsible for leaking the photos of Dean Laidley under arrest shared the image with six other officers in a WhatsApp group, according to The Age.
The Age has revealed that Shane Reid, a senior constable with five years experience based in South Melbourne, has been stood down and is expected to be charged with the dissemination of the photos, which show Laidley in a dress with a wig and makeup.
Senior Constable Reid is facing charges of unauthorised disclosure of information, which carries a maximum prison sentence of two years.
Deputy Commissioner Shane Patton stated that the Senior Constable shared the photo with six others, including civilians, in a WhatsApp message group.
The Age has also confirmed that other officers were among the six people in the message group. If these people are found to have shared the photos they could face misconduct charges.
Victoria Police's internal investigators are analysing Senior Constable Reid's phone to trace who shared the images.
The Age has also revealed that messages describing compromising images on Mr Laidley's phone and allegations of his behaviour.
"I am appalled that an employee of Victoria Police has taken these photographs," Mr Patton said on Monday. "It's unacceptable conduct, it's appalling conduct and that type of of conduct has no place in our organisation.
"This is one of the most appalling breaches and I cannot recall a breach of someone's privacy like this."
Laidley's mugshot was widely shared on social media on Sunday night, as well as a photo taken through a window of a police station, which showed him being interviewed by two uniformed officers.
He was taken into custody on Saturday night and faced court on Sunday.
Senior Constable Reid came forward to his supervisor once the photos became widely spread after news of Laidley's arrest on Sunday. He was not part of his arrest or the ongoing investigation and is said to be remorseful.
Victorian Police Professional Standards Command investigated interviewed Senior Constable Reid on Monday and Deputy Commissioner Patton said Reid is expected to face court at a later date.
The 53-year old was arrested Saturday night in St Kilda. He was charged with stalking and committing an indictable offence on bail.
His lawyer told Melbourne Magistrates Court on Sunday that her client was suffering from a psychiatric illness and it was the first time in police custody, according to police files. He did not apply for bail and will remain in custody until May 11.
Deputy Commissioner Patton, while not naming Laidley, apologised to him at a press conference on Monday.
"We've breached their privacy and I do apologise on behalf of Victoria Police," he said.
Meanwhile, groups such as The LGBTIQ Legal Service and Liberty Victoria have stated that this incident damages the public's trust in Victoria Police.
"There is a long history of mistreatment of and brutality towards our community by the Victoria Police," the LGBTIQ Legal Services coordinator, Sam Elkin, said.
"And last night I just shook my head because I knew we had the funeral [for police officer Josh Prestney] today and I didn't want to distract from the grief and issues confronting Victoria Police at the moment."