It follows the arrest of an former ombudsman investigator over an alleged theft of sensitive security documents.
It is understood the documents contained information the police and security service MI5 believe could put the lives of individuals at risk.
The PFNI said it was an "astounding and very worrying state of affairs".
A 69-year-old man was arrested in Dartford, Kent, on Sunday after detectives from the PSNI's Serious Crime Branch conducted a joint search with local police.
It is understood he retired from the ombudsman's office a number of years ago and that the documents do not refer to any case currently being investigated by it.
Mark Lindsay, chair of the federation, said there had to be an element of fairness for police officers under investigation.
"They need the same protections that a normal member of society would have and that doesn't exist at the moment with the ombudsman's office," he told the BBC's Good Morning Ulster programme.
"There is a real role for the Police Ombudsman's office, but that office has to hold the confidence of police officers."
The police have begun a criminal investigation into the issue and have also suspended the release of any further sensitive material to the ombudsman's office until a review of security protocols is carried out.
The Ulster Unionist MP Tom Elliott said the ombudsman's office had serious questions to answer.
"When there's alleged wrongdoing, the PSNI should be called in at an earlier stage to investigate these matters so that they can be independently investigated," Mr Elliott told the BBC.
"There is a failure and a gap there that needs to be resolved."
In a statement to the BBC, a spokesman for the ombudsman confirmed he was alerted by police last week about the theft of sensitive material originating from the office.
The office of the Police Ombudsman said it was anticipated that this suspension of the sharing of sensitive material "will be temporary."

The Canaries, who won thanks to Jonny Howson's goal, are second in the Championship with two wins from three.
"The first 10 minutes were quite even but after that we were in control of the game. We hit the woodwork a few times," Neil told BBC Radio Norfolk.
"If our passing in the final third was a bit slicker we would have had more chances. I think we deserved to win."
Neil continued: "I can't really remember too many opportunities for them to score, if any.
"The first goal is crucial because it mucks up their gameplan because they need to come out and leaves us more space to go and exploit."
Norwich were relegated from the Premier League last season with 67 goals conceded, the joint-second-most in the division.
But they have kept clean sheets in their last two home games, and Neil said: "That's going to be key going forward.
"(A lack of clean sheets) was a criticism of us last season and something we want to try to fix. In the last two games it's been better."

A truck is said to have exploded as it was off-loading butane cooking gas in the town of Nnewi in Anambra State.
Reports of casualties vary from 35 to more than 100 people killed, including factory workers and neighbours.
Local police have confirmed the incident but have yet to provide further details. A huge fire reportedly followed the blast.
The dead and injured are being taken to the Nnamdi Azikiwe University Teaching Hospital in Nnewi.
A witness told the Vanguard newspaper that the blast was triggered when a truck began discharging cooking gas without waiting for the mandatory cooling time.
People who had come to fill up their gas cylinders were caught up in the explosion as well as passersby, the newspaper reported.
Witnesses say the explosion caused a huge fire that firefighters and residents took several hours to put out.
The Police Federation of Northern Ireland (PFNI) has called for a "full inquiry" into the operation of the police ombudsman.
[NEXT_CONCEPT]
Norwich boss Alex Neil was pleased with his side's "control" during their 1-0 victory over Bristol City on Tuesday.
[NEXT_CONCEPT]
Scores of people are reported killed in an explosion at an industrial gas plant in southern Nigeria.