Appearing on "Chris Moyles' Quiz Night", the "Little Britain" star told the Radio 1 DJ that he would like to perform a sexual act on a teenage member of the boy band One Direction.
Ofcom, the media watchdog, is now assessing whether the show broke strict rules governing the use of offensive language amid growing concerns about declining standards on television.
The watchdog and Channel Four have both received complaints, and campaigners described the lewd joke made by the children's' author as "disgusting" and "appalling".
They argued it was as distasteful as the phone calls that Jonathan Ross and Russell Brand made to Andrew Sachs in 2008, claiming that Brand had sex with the "Fawlty Towers" actor's granddaughter.
Agreeing with Moyles that Harry Styles was his favourite member of One Direction, Walliams talked fondly about the singer's hair on the show, which was watched by 1.1 million viewers.
The 40-year-old comedian, who is married to the model Lara Stone and has published four books for children, including "The Boy in the Dress" and "Gangsta Granny", then said: "I'd like to suck his cock."
The show was aired at 10pm, only an hour after the watershed, and is likely to have attracted a large teenage audience.
Producers of the show cleared the controversial exchange for broadcast, even though Channel Four could now be fined if found to be guilty of breaching guidelines on indecent behaviour.
Under Ofcom's rules, broadcasters are asked to ensure that potentially offensive material can be justified by its 'context', which includes factors such as the time it was shown, the programme's editorial content and "the degree of harm or offence likely to be caused". There is no list of words that are banned from use on radio or television.
While the show was aired after the watershed, the media watchdog will now assess complaints that it has received, in addition to the four made to Channel Four.
The BBC initially only received two complaints after Russell Brand left messages on Andrew Sachs's answerphone, but the number rose to thousands after the incident was brought to the public's attention.
Peter Foot, the chairman of the National Campaign for Courtesy, said that Walliams's remark was worse than the comments made by Ross and Brand.
"I've never heard of anything going this far," he said.
"I'm amazed there hasn't been more of an uproar about this because that it is incredibly graphic language to use.
"It doesn't leave much to the imagination."
Mr Foot said that Channel Four could not justify the lewd joke by saying it was shown after the watershed as he said many teenagers could have been watching.
A Channel 4 spokesman said: “The show was appropriately scheduled post-watershed at 10pm and viewers were warned of strong language and adult humour.”
An Ofcom spokesman said: "Ofcom received two complaints about the episode of the programme, which was broadcast after the watershed. We will assess the complaints against the Broadcasting Code, the rule book of standards which broadcasters must adhere to."