The regulator said that it has put in place "robust procedures" to ensure that there is not any conflict of interest regarding Richards's application to become the next BBC boss.
There have been concerns that Richards's application could prejudice his involvement in Ofcom's lengthy review of whether the corporation should be included in a new definition of media plurality in the UK.
Philip Davies MP, a member of the culture select committee, told the Sunday Times: "Ofcom is not only a publicly funded body but, because it and Richards are currently looking at the BBC and plurality, there is potential conflict of interest here.
"If Richards were to conclude that the BBC were not to be included in any definition of plurality, it might question his motives if he was in for the DG's job."
Culture committee chairman John Whittingdale added: "While it would be unfair to exclude Richards from running as DG, if he is a live candidate, as it were, he should not be making or taking any decisions about plurality and the BBC. He must leave the room when Ofcom is discussing this issue."
Ofcom said that it decided to take the unusual step of confirming Richards's application to the BBC due to the "significant level" of media speculation, reports Broadcast.
Ofcom has decided that Richards does not need to step back from his duties as chief executive, but said that he will remove himself from any discussions on where the BBC could have an interest.
Broadcast reports that this includes all executive and board meetings, along with "formal and informal" policy discussions.
Richards, a former senior policy advisor to Prime Minister Tony Blair, is thought to be a strong candidate for the BBC job due to his extensive policy background, particularly as the BBC looks towards the renewal of its Royal Charter.
He has also previously worked at the corporation as controller of corporate strategy.
However, he will face strong competition from a number of internal candidates, including BBC chief operating officer Caroline Thomson and BBC Vision director George Entwistle.
BBC chairman Lord Patten recently confirmed that candidates for the director general role would be interviewed in June, with an appointment expected in July.
Despite a significant cut expected to Thompson's current salary (£671,000) for his predecessor, Lord Patten feels that people would "crawl over barbed wire" for the high profile job.
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