Football Association chairman Greg Dyke has said he will return a £16,000 watch given to him by the Brazilian Football Confederation (CBF).
Fifa has asked officials to return the watches or risk disciplinary action.
The commemorative gifts were handed out by one of the CBF's sponsors to various people at the World Cup, including 28 members of Fifa's executive committee.
"We are taking steps to return the bag and its contents, which are still in their original packaging," Dyke said.
The watches were given to 32 association chiefs, 28 Fifa executive committee members, and five other members of South American associations.
Fifa president Sepp Blatter was also on the list of recipients but it is not known what happened to that watch, while Uefa president Michel Platini is returning his.
Dyke says he had intended to donate the watch and other items to charity and is backing Fifa's investigation.
He added: "During the Fifa Congress in Sao Paulo, a bag with a watch inside was left in my hotel room by the Brazilian FA. I had no idea of the value and it has been left untouched in my office since returning to England.
"I welcome Fifa's investigation on the matter, including their intention to donate the items to good causes back in Brazil.
"The fact that gifts of great value are being handed out randomly and often with the recipient unaware shows up a culture in need of change. I had actually set the bag aside in my box of items to donate to charity."
Fifa vice-president Jim Boyce said he found the watch in a souvenir bag in his garage last week and will return it.
Several officials did report the watches to the ethics committee.
Donations to charity, eh? In his garage, eh? Such generous and happy-go-lucky chaps, these top FA officials. Absent-minded too, as they seem to have forgotten to report these gifts to FIFA.Analysis from BBC chief sports correspondent Dan Roan
"This is awkward for Greg Dyke and the FA - and yet another embarrassment for Fifa, which is currently trying to prove that it has learnt from the corruption allegations that have blighted world football's governing body in the recent past. It raises serious questions over why senior football officials ignored - or were not aware of - the rules governing gifts, and leaves Fifa open to accusations of largesse.
"Many will wonder in particular why secretary general Jerome Valcke was not aware of what could and could not be given. On the eve of a major conference about sporting ethics it is hosting in Zurich on Friday, the 'watch-gate' scandal is the last thing Fifa needed."
There's something obscene about gifts of this value being dished out left, right and centre.
