One of the sport's traditional powers, the Australians won a total of 10 medals in the pool but only one gold, in the women's 4x100 metres freestyle relay.
For a country surrounded by water that takes swimming seriously, it was a major flop, particularly after Australia's swimmers won six gold medals in Beijing and seven in Athens.
"It is clear the world has lifted the bar when it comes to swimming and so must we," Swimming Australia president David Urquhart said in a statement on Monday.
Australia's swimmers have always punched above their weight at the Olympics but have come under fierce criticism at home because they only won one gold, their lowest haul since the Barcelona Olympics, 20 years ago.
The last time Australia did not win an individual swimming gold was at Montreal in 1976.
Sprinter James Magnussen, the world champion for 100 freestyle, bore the brunt of the criticism after boasting before the Games that he would win two golds.
But Magnussen had to settle for silver when he was beaten by American Nathan Adrian, by just 0.01 seconds, in the final.
The Australian 4x100 freestyle team, who also bragged they would win gold, missed out on the medals altogether when they finished fourth.
"There has been a lot said by people here in London and back at home about our overall medal performance. While everyone is entitled to their own view, no one should doubt the commitment or effort of our swimmers," Urquhart said.
"This is not a time for blame and scapegoating, this is an opportunity to make the changes required to rise to the international challenge."
Urquhart said Australia always reviewed their results after an Olympics but would also conduct a full probe in light of the team's below-par performance.
The review will be headed by coach Bill Sweetenham and two-time Olympic gold medallist Susie O'Neill.
"They will bring extensive knowledge and experience that will help Swimming Australia prepare for the Glasgow Commonwealth Games (in 2014) and the 2016 Olympic Games in Rio," he said.
"This review will be independent and it will come to its own conclusions."