The Garda watchdog has been called in to investigate allegations that senior officers routinely wiped penalty points from drivers' records.
Mr Shatter claimed he did not have the power to take the unusual step until now as it had become a political controversy.
And with penalty points issue sparked by a whistleblower and rumbling on for well over a year, the minister has also moved to widen the ombudsman's powers allowing it to investigate complaints made directly to its offices by serving gardai.
The scandal escalated in the last week when Garda Commissioner Martin Callinan was forced to answer questions on the allegations over five hours at the Public Accounts Committee.
Concerns were also raised that the parliamentary body - which oversees the use and spending of public money - was overstepping its remit.
It plans to discuss in private the possibility of hearing evidence from the two whistleblowers, former garda John Wilson and a serving officer, who have sent files to the committee which allegedly show misuse of the fixed penalty system.
Mr Shatter attacked unnamed members of the committee claiming they prejudge its inquiries.
"Recent comments by that minority pose the risk of bringing the work of the committee into disrepute, undermining its role and its credibility and are particularly disturbing," he said.
Independent TD Shane Ross is one of the most outspoken but productive members of the committee having been central to unearthing scandals at the former training agency Fas and the Central Remedial Clinic.
Last week he said some of Commissioner Callinan's remarks to the committee were extraordinary and disdainful.
Mr Callinan was angered by plans to hear the whistleblowers' evidence and he will take legal advice on what action is open to him ahead of any hearings.
Mr Shatter said: "We both believe that it is in the public interest that this matter is put to bed once and for all and that it is important that circumstances in which continuing allegations are being made should be addressed definitively to allay any public concerns."
The ombudsman will investigate the allegations and the preservation of the integrity of Garda records.
The claims have already been investigated by the auditor and comptroller general and internally by the force's assistant commissioner John O'Mahony.
Both reports were released last year.
Among files reportedly in possession of the committee is evidence about fixed charged notices wiped out for seatbelt offences.
In 2011, there were 344 cases terminated by senior officers, in 2012, 506 terminations, and last year, when the scandal was at its height there were none.
The most recent set of allegations from a whistleblower claims that more than 200 senior Garda officers inappropriately - and in most cases corruptly - wiped penalty points from driving licences.
The Commissioner has not seen the allegations first hand.
Announcing the renewed inquiry and extended powers and links between the Garda and the Ombudsman's office, Mr Shatter said: "I hope that people will allow GSOC to proceed with its work unhindered.
"On a general point, the legislation governing the operation of GSOC does not allow it to investigate complaints made directly to it by members of An Garda Siochana.
"I believe that this general prohibition has adversely affected the ability to address circumstances of the kind which have arisen in relation to penalty points."
Mr Shatter said the circumstances around whether he could refer the penalty points scandal to the ombudsman had changed in recent weeks.
He said the force had become embroiled in political controversy.
" It seems to me, particularly in the light of circumstances where allegations are being continuously made and the political controversy which An Garda Siochana finds itself at the centre of, that circumstances have now arisen where it is in the public interest to refer the allegations which are being made and the manner in which those allegations have been pursued, including issues relating to the preservation of the integrity of Garda records, to GSOC," he said.
The ombudsman's office said its investigation would be wide-ranging and that it would not tolerate obstruction.
"We expect and will be demanding full and immediate cooperation from all parties," it said.
Commissioner Callinan said the force is committed to supporting and protecting officers who report wrong-doing within the organisation.
"It is critical that the fixed charge penalty notice system retains the support of the public so that it continues to play an important role in improving road safety," he said.
Later the Public Accounts Committee said it will take legal advice on whether it should pursue its investigation of the penalty points scandal in light of the Ombudsman's role.
Chairman John McGuinness attempted to defuse the increasingly bitter row with the Commissioner and the Justice Minister over the committee's work.
He said they originally wanted to hear from whistleblowers to get a better understanding of the fixed charge penalty system.
"We are not investigating the actions of any member of An Garda Siochana which is not within our remit or capacity," he said.
The committee will decide tomorrow evening whether to pursue the investigation.