The Bishop of Chichester last year offered a formal apology after a legal claim over allegations of sexual abuse by Bell was settled.
Bell (below) was Bishop of Chichester from 1929 until a short time before his death in 1958.
Commissioned by the Church of England's National Safeguarding Team, the review will examine processes surrounding the allegations, which were first brought to the Diocese of Chichester in 1995 and to Lambeth Palace in 2013.
The review, expected to be completed by the end of next summer, will also consider the processes involved in informing the decision to settle the case.
The Bishop of Bath and Wells, Peter Hancock, the Church of England's lead bishop on safeguarding said: "The Church of England takes all safeguarding issues very seriously and we will continue to listen to everyone affected in this case while we await the findings of the review.
"The Diocese of Chichester continues to be in touch and offer support to the survivor known as Carol, who brought the allegations."
The appointment of Lord Carlile of Berriew has been welcomed by the Labour MP for Birkenhead, Frank Field, who is a member of the George Bell Group, which has challenged Bishop Bell's condemnation as a paedophile.
He said: "In Lord Carlile there could not be a better independent person to conduct this inquiry. It speaks volumes that the Archbishop has made this move, all of which is to his credit."