The allegations, which date from the 1970s onwards, relate to Knowl View School in Rochdale, where the Liberal Democrat MP served as chairman of governors.
The claims come as a new book by Simon Danczuk, a Labour MP who now sits in Smith's old Rochdale seat, claimed that police officers, spies and politicians covered up the child abuse carried out by the Liberal politician.
In November 2012, Greater Manchester Police (GMP) said Smith abused young boys in the 1960s in his role as secretary of the Rochdale Hostel for Boys Association.
He had been accused of abusing eight youngsters at Cambridge Hostel in the town by spanking and touching them.
After that announcement, GMP began looking at fresh claims of abuse at Knowl View, a council-run school for vulnerable boys that closed in the mid-1990s.
Police said the fresh complaints from the seven alleged victims relate to "at least 11 potential suspects".
Detective Inspector Caroline Ward said: "Following the publicity surrounding Sir Cyril Smith last year, seven people came forward to report physical and sexual abuse which occurred at Knowl View from the 1970s onwards.
"Those allegations relate to physical and sexual abuse that took place between pupils and adults at the school and these complaints are currently being investigated.
"These complaints relate to at least 11 potential suspects, but as not all victims knew the full names of their abusers we cannot as yet confirm the exact number of different suspects."
Ward added that the investigation team wanted to talk to others who may have been abused at the school. She said: "I would encourage anyone who was a victim of either sexual or physical abuse to come forward and speak to police as the more evidence we have the better the chances of bringing abusers to justice.
"We totally understand that for many people they will not want to relive the abuse they suffered, but for those who do want to come forward I want to give you complete confidence that your complaints will be treated seriously and thoroughly investigated."
In 2000, GMP carried out a "comprehensive investigation" into abuse claims at the school that led to the conviction of one man for indecent assault and gross indecency.
It was ruled there was insufficient evidence to charge any other individuals and no specific allegations were made at the time against Smith.
An independent report into the way Knowl View was run is due to be made to Rochdale Council next month. Andrew Warnock QC has been tasked to probe all council decision-making about the school.
Three separate files regarding Smith's actions at Cambridge House were passed to the director of public prosecutions and the Crown Prosecution Service, although no prosecution was ever pursued.
Smith, who died four years ago aged 82, served as an MP for 20 years before retiring. Danczuk's book, Smile for the Camera: the Double Life of Cyril Smith, alleges that the 29-stone politician was left free to abuse children as young as eight despite 144 complaints by victims and that police forces repeatedly investigated sex-abuse allegations against him but attempts to prosecute were blocked.
Officers were told they would be sacked and were gagged by the Official Secrets Act, Danczuk says.
He said: "At first, I respected him for his homespun politics, his spit-and-sawdust grit and his passion.
"But, in time, the scales fell from my eyes and I was confronted with absolute horror. Once you looked beyond the jolly clown playing for the camera, there was a sickening, dark heart.
"I saw it in police files that had been hidden for years and I heard it in the desperate voices of grown men Cyril had abused as boys.
"As soon as the first victim approached me, there was no turning back. Every email, every phone call, every meeting uncovered more about his double life.
"And the more I found out, the more I came to realise that this wasn't just about abuse, it was about power - and a cover-up that reached from Rochdale all the way to the very top of the Establishment.
"Smith posed as a tireless worker for children - at one point he was governor of 29 local schools and set up a youth charity, Rochdale Childer - using it all as a cover to prowl from classroom to classroom and youth club to youth club."
A Liberal Democrat Party spokesman said: "Cyril Smith's acts were vile and repugnant and we have nothing but sympathy for those whose lives he ruined.
"His actions were not known to, nor condoned by, the Liberal Party or the Liberal Democrats."