The Australian Olympic Committee (AOC) could withdraw funding for five Olympic swimmers, including world champion James Magnussen, who have admitted taking a banned prescription drug before the 2012 London Games.

The AOC said on Friday it has decided to hire a Queens Counsel to investigate the drug incident and other allegations of misbehaviour within the Australian Olympic swimming team.

Magnussen and four other members of Australia's 4x100m freestyle relay team - Tommaso D'Orsogna, Cameron McEvoy, Eamon Sullivan and Matthew Targett - confessed earlier on Friday to taking the sedative Stilnox as part of a "bonding session" at a pre-Olympic camp in Manchester.

The sixth member of the squad, James Roberts, said he had never taken Stilnox in his life.

The swimmers admitted they knew Stilnox had been banned by the AOC weeks beforehand.

"That night we shared some stories and as a group we decided to take the Stilnox," an apologetic Eamon Sullivan said.

"It did cross my mind that it was a bad idea.

"I'm not here to defend myself, I'm here to admit I made a bad decision.

"I should have showed more leadership at the time."

James Magnussen, dubbed 'The Missile' by press, was a favourite going into the Games. He said the chance to bond with his teammates was a welcome relief from the ongoing hype surrounding his imminent performance.

"I was feeling under so much pressure and it had been building for the best part of a year. The chance to bond with these guys and be normal for one night was in my intention," Magnussen said.

"I have a lot of regrets, but I don't feel it [being a part of the bonding session] affected my performance."

Australian Swimmers' Association general manager and former Olympian Daniel Kowalski read out a statement on the relay swimmers' behalf.

"We all acknowledge that at the time Stilnox was consumed, it had been recently prohibited by the AOC," Kowalski read.

"We own up to it and are deeply sorry."

Kowalski revealed that the Stilnox was prescribed in Australia to Matt Targett and Eamon Sullivan prior to it being banned.

The incident reported occurred after a day of bonding between the men's relay team which involved a trip to the movies and dinner.

"It was at this dinner that Matt and Eamon were asked how they had bonded with senior members of the team when they were junior members. Eamon and Matt both shared their stories of initiation onto the relay squad and together we decided to continue in what we felt was a harmless activity and tradition," Kowalski said.

"We didn't think it was anything more childish behaviour and there was nothing untoward about our actions.

"We were all in bed by 10.30pm."

AOC secretary-general Craig Phillips said the five swimmers faced possible sanctions from the Olympic body, including withdrawing funding in the lead up to the 2016 Rio Olympics.

The AOC could also ask for money paid under the medal incentive scheme to be returned, meaning Magnussen could be forced to pay back $10,000 given to him for winning a silver medal at the Games.

The swimmers may also have broken an Australian team agreement.

Phillips said the AOC would await the outcome of Swimming Australia's newly-formed integrity panel, who will also investigate the swimmers.

The relay team members also admitted some of them made prank calls and knocked on other teammates' hotel room doors during the night but denied entering any rooms.

Their admission follows the publication of an independent review of the poor swim team campaign at the Games which found "toxic incidents" including misuse of prescription drugs, bullying and hazing went unchecked in the lead up.

"As a result of the revelations this week arising from the swimming reviews, the AOC has decided to engage a Queens Counsel to investigate these incidents further," Phillips said in a statement.

"We would fully expect that the athletes will give their total cooperation to any investigation we mount."

Earlier this morning swimmer Jade Neilsen revealed details of the drug-fuelled, late night antics prior to the London Olympics, in which her and her roommate had their door barged in by barely clothed members of the Australian men's relay team.

Neilsen was in camp in Manchester when she witnessed the destructive bender.

Jade Neilsen at the 2012 London Olympics. SOURCE: Getty Images

"I will confirm that they were being inappropriate and it was towards [name withheld] and I," Neilsen told News Limited.

"I won't specifically say [what happened]. It has sort of already come out pretty much what they've done.

"All I can say is their behaviour was completely inappropriate.

"It was so inappropriate it was not funny. That is all I can really say about that."

In the early hours, just after midnight, a group of male swimmers are believed to have door knocked and made menacing phone calls to female swimmers in camp.

Neilsen answered her door, only to have Magnussen and McEvoy barge in, shirtless. The pair then lingered, with one attempting to lay on one of the athletes' bed, before being asked to leave.

They returned later that morning, but did not enter the room. The women ignored the persistent knocking, this time from Roberts, in his underwear, with McEvoy in tow.

The two women told their coaches they were scared by the intrusion. The men were reportedly acting "strangely", stumbling and being disruptive.

The incident was reported to the Australian swim team's head coach Leigh Nugent, however no action was taken.

The cocktail of narcotics and stimulants can be deadly.

"They call the effect the Heath Ledger effect," Dr John Darcy explained.

"It's a complex mixture of chemicals in the brain that gives a fake high."

Seven News understands a number of sponsors have already pulled the pin on lucrative endorsements of the swim stars, and all this just days after a report exposed the "toxic" culture of Australia's swim team in London.

The Bluestone Review lifted the lid on athletes abusing prescription drugs, alcohol and curfews during Games.

Australia won just one gold medal in the pool in London, their worst Olympic performance in 20 years.

Meanwhile, Former Australian Rugby Union chairman Peter McGrath will head a Swimming Australia integrity panel that will look to discipline athletes, coaches and staff in the wake of the damning findings in the report.

Swimming Australia president Barclay Nettlefold encouraged those approached by the panel to be forthcoming with information.

In regards to the 4x100m relay team, it may have already happened.

"We will be decisive, we will be firm and we will discipline athletes, coaches and staff accordingly, where such action is deemed appropriate and necessary," Nettlefold said.

"We want to stop talking about rumour and act on the facts of what did or did not actually occur."

One person under the spotlight is national swim team head coach Leigh Nugent, who oversaw Australian swimming's poor effort.

McGrath will be accompanied on the panel by Swimming Australia board members Peter Lozan, Chloe Flutter and interim chief executive Jeremy Turner.

Cameron McEvoy, Eamon Sullivan, James Roberts, James Magnussen, Matt Targett and Tommaso D'Orsogna. SOURCE: Getty Images

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