The child, who cannot be identified, was six years old at the time of the attack, which took place 11 years ago at the Angell Road Children's Home in Brixton.
The home has since closed down as part of Lambeth's drive to replace such establishments with foster parents, private and voluntary care homes.
Lambeth Council admitted yesterday that it expected many more incidents of abuse relating to its homes to come to light during the inquiry, which could take up to two years to complete.
"It is impossible to say how many children were involved but it could be an awful lot," said a spokeswoman. She said people would only know the true extent of the damage done when the inquiry reported its findings. In a statement the council added that it was "absolutely determined to uncover any abuse that took place in the past".
The leader of the inquiry will be announced today and the early part of the proceedings will focus on the abuse at the Angell Road home. The victim is now 17 and has made statements to the police. His mother is reported as saying he has refused to take a blood test to establish whether he has contracted the Aids virus. She could not be contacted yesterday.
The abuser has been named as Steve Forrest, a residential social worker who died in 1992 after contracting HIV. He certainly had contact with many other children and the council fears he may have abused them too.
A former child protection social worker in Lambeth who remembered the Angell Road home spoke to The Independent yesterday and described conditions there and in other homes now closed.
"They were horrifying places. You never knew who was doing the abuse but there was always someone involved. For some kids once they got to the children's home they were in trouble," he said.
"I understand Lambeth have done a lot recently to improve matters by getting rid of these homes."
Lambeth closed all its homes in 1994. If the Lambeth inquiry does reveal a substantial history of abuse in the borough's care homes, it will be another area to shade in on the darkening map of child abuse in the UK.