Lord Janner was accused of a string of historic child sex abuse allegations during the 1960s, 1970s and 1980s but deemed unfit to stand trial because he is suffering from dementia.
A spokesman said: "The CPS Victims' Right to Review scheme was set up to give complainants the ability to ask the CPS to review its decisions - usually when there has been a decision not to prosecute.
"The CPS has been asked to invoke this process in the case of Lord Janner and that review is now taking place.
"Where the decision is made by the DPP this review would normally be done by the CPS Appeals Unit. However, due to the unique circumstances surrounding this case, the CPS has instructed external counsel instead."
There has been pressure from lawyers representing alleged victims of the lawyer and politician, who was an MP for 27 years.
|Justice Lowell Goddard|
An NSPCC spokesman said: "We welcome this news. Victims of sexual abuse were angry at the decision not to prosecute when there was clearly a case to answer.
"This review needs to reassure those with allegations that every option was fully explored. We have questioned why a trial of facts was not suitable whatever the state of Lord Janner's health. Given the mistakes of the past, victim confidence is now key."
Simon Danczuk, the Labour MP for Rochdale who helped expose child sex abuse carried out by the late Liberal MP Cyril Smith, said he welcomed the review.
"I hope it is entirely independent of previous decisions by Saunders.
"She sat on the police file for nine months before announcing a muddleheaded decision when parliament was not sitting and is now announcing this just as MPs prepare to come back. I hope we are not seeing political manipulation with a small 'p'."
We can always 'hope' Mr Danczuk! It may be utter foolishness to do so, but we can always hope.