Statements were taken from two former residents of the home on Friday by officers from the department's registration and inspection unit.
In a statement confirming the inquiry had been launched into the home, which is called The Cusicks, Ken Foote, deputy director of social services said yesterday: 'It is very early days and too soon to predict the outcome of these investigations.'
One of the complainants, Daniel Kane, now aged 35, has alleged he was sexually abused at the home when he was a resident for nine months during 1986 and 1987. The other complainant, aged 30, alleges physical abuse over a five-year period.
Mr Kane has joined a new pressure group, York Survivors Forum, which has written to Virginia Bottomley, Secretary of State for Health, to campaign for tighter restrictions on private homes for the mentally ill to protect vulnerable patients. The group claims abuse is rife in homes which are increasingly used to accommodate mentally ill patients under the policy of moving them from psychiatric institutions into the community.
Mr Kane said: 'I am the victim of sexual abuse in that home and I have decided to speak out at last. Most people in homes like these live in fear, not daring to speak out about the dreadful acts committed against them.'
The allegations centre on John Cusick, who has run the home for 20 residents for 10 years. He told the Independent on Sunday: 'We can totally disprove everything that has been put in the statements of evidence which I have been shown. I have just finished a meeting with the social services and I am totally confident we will be totally exonerated.
'This is just the sort of risk we take. We are dealing with people with severe behaviour problems. The Government and social services will jump on us but they won't fund us properly.'