The decision was taken by Chief Minister K Chandrasekhar Rao after the CID submitted its report.
The chief minister took the decision at a meeting with some cabinet colleagues, Director General of Police Anurag Sharma and other top officials.
More than 50,000 students had appeared in TS EAMCET-II held on July 9 but doubts about the leakage of question paper were raised with average students bagging top ranks.
Following persistent demands by a section of students and their parents, the government ordered a CID inquiry.
The CID so far arrested three brokers, who allegedly conducted practice for some students in Pune, Bengaluru and other cities with leaked question papers.
The investigators believe 100 students benefited from the leakage of question papers and the persons involved collected Rs 15 crore from these students.