Swami Shankarananda will remain spiritual director of the Shiva School of Meditation and Yoga, at Mt Eliza, after apologising for his "Tantric sexual activities".
Swami Shankarananda, also known as Russell Kruckman, said he recognised the "disastrous effect" of his actions and had stopped his behaviour, which was raised publicly by former members of the residential ashram.
"I want to make a sincere apology to the community and to anyone who has been hurt by my actions, or even by hearing of my actions," he said in a letter to members, obtained by AAP on Wednesday.
"I had a carrot in my ear. Truly. When contemplating Baba's life, I was most engaged by the dramas of the succession. I profoundly underestimated the impact of his Tantric sexual activities. And my own."
These "Tantric activities" were the only blemish on the ashram's good work.
"I don't know how I could have been this stupid, but I was," Swami Shankarananda wrote.
"I beg your forgiveness."
The ashram's management committee has written to members, saying it was urgently implementing internal processes to address grievances and engaged independent mediator Callum Campbell.
"It is well-known that our lineage is a Tantric path, involving worship of the Goddess with strict disciplines," the committee said in its letter.
"Swamiji has never claimed to be a sexual renunciant nor demanded celibacy from any of his students, and until now Swamiji has kept aspects of the teaching and his personal activities secret in line with age-old Hindu Tantric scriptures."
The committee, which had sought legal advice, said there was no basis for a criminal complaint.
Free counselling has been offered to the female students, which Fairfax Media reports number up to 40.
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