At a "drugs bar" dealers were freely selling cocaine, ecstasy and cannabis, it is alleged.
Describing the scenes one reveller told the newspaper: 'Couples turned into foursomes and fivesomes. There were so many girls who were totally naked.
"Lots of girls were very drunk and high and having sex. Girls in the orgy tent were confused and delirious and some semi-conscious. Women would stagger around in a daze. You could see it in their eyes, they were a bit lost."
Residents near the party site on a bank of the Thames described half-naked students wandering through their gardens as they arrived and left on buses.
One told The Sun: "Nobody wants to see breasts and back ends hanging out and men dressed in drag - especially young kids. There's no respect. A complete disregard for anyone else."
Oxford University officials have vowed punish students who broke the law and could throw them off their courses.
A spokesman said: "This event is not authorised or approved by the university. It has undermined our good work for far too long and we want to see an end to it.
"Drug use and dealing are banned by the university.
"We also take a zero-tolerance approach to any form of sexual harassment or bullying. We want to investigate. Anyone guilty of an offence can expect the toughest university sanctions, including possible expulsion.
"We share the disgust Oxford residents feel for what they've seen as will the decent, hard-working majority of our students."
In May Oxford University launched a crackdown on alcohol-fuelled parties at a number of its colleges amid complaints about debauched behaviour.
Students at Wadham College were forced to drink watered-down cocktails while Lady Margaret Hall (LMH) has suspended its "bops" until the end of term.
Students' hi-jinks have caused controversy over the years, with university officials trying to step in to put an end to the fun.
Wadham College has now reformed its alcohol policy at Queerfest - a week-long celebration of LGBTQIA - and Wadstock - a music festival.
Drinks promotions will be scrapped at the events, with cocktails limited to half pints and a maximum alcohol content of 6% ABV, according to Cherwell, Oxford's weekly student newspaper.
The recommendations came in response to complaints of drunkenness at college social events.
Last October, security had to be called in to an alcohol-fuelled party at Oxford University after the gilded students' behaviour got out of hand.
Undergraduates stripped off at the notorious "bop" at prestigious Christ Church college, with male scholars going topless while females stripped down to their bras.
Bouncers were drafted into the college-funded party as revellers downed half-pint cocktails costing around 50p each.
The freshers' party was advertised online with pictures of the organisers lying on the floor surrounded by bottles of vodka.
In November 2017, an LMH student was criticised for trivialising the 'lived experience of survivors" of sexual assault after attending a bop dressed as film producer Harvey Weinstein.
The student appeared as Weinstein for LMH's "horror movie classics" themed party, Cherwell reports.
And last June half-naked students were pictured standing at a bus stop next to stunned families while they waited to be whisked off to a society ball.
