She has gone over the heads of department executives and the State Services Commission by ordering an independent inquiry, saying yesterday three current investigations "aren't sufficient for the public and they aren't sufficient for us".
Auditor-General Kevin Brady will conduct it, and he will set his own terms of reference with no restrictions imposed by the Government.
Miss Clark returned from an overseas trip on Sunday, and caught up with developments.
"I've been constantly blindsided, over about the past nine or 10 days, on this issue," she told reporters.
"It's fair to say that the confidence of the Cabinet has been somewhat shattered. There are things that obviously never came to our attention."
The services' problems began when it was revealed last month that Mary Anne Thompson, when she was head of the service, helped three of her relatives in Kiribati apply for residence permits.
An inquiry ordered by the Department of Labour, which is responsible for the service, discovered the applications were given preferential treatment and that officials were instructed to override policy.
Ms Thompson was cleared of being involved in the preferential treatment but she was soon stuck with another problem -- the doctorate she claimed to hold from the London School of Economics apparently did not exist.
The State Services Commission handed the file on that to the police, and Ms Thompson resigned.
Then it became known that between 2004 and 2007 there had been 19 proven cases of theft, bribery and fraud within the Pacific branch of the service.
As a result, nine people resigned or were fired and three cases were referred to the police.
It now appears that ministers were told very little, or nothing at all, about these events.
"Ministers were told these were employment issues which were quite narrowly confined, which chief executives had dealt with," Miss Clark said.
"I think ministers were put in a very difficult position. They can't run operational matters."
She said she was satisfied ministers had acted appropriately on the basis of the "extremely limited" information they were given.
When she was asked at her press conference what happened to the "no surprises" policy department executives were supposed to follow, she replied: "That's a very good question."
Miss Clark also revealed that ministers were not shown a report of an inquiry by former justice secretary David Oughton until it was released to the media under the Official Information Act.
That report revealed that officials had been instructed to override policy when they issued the residence permits to Ms Thompson's relatives.
The names of all the officials involved were blanked out in the copies given to the media.
The National Party is accusing Miss Clark of trying to isolate her ministers from Mr Brady's inquiry.
State services spokesman Gerry Brownlee said last night it was known that Immigration Minister Clayton Cosgrove was briefed in December last year.
"Why did no one take these issues seriously until matters relating to Mary Anne Thompson and the Pacific branch were made public in April 2008?" he said.