DAVID Cameron is steadfastly standing by Baroness Butler-Sloss as head of the new wide-ranging inquiry into historical child abuse allegations despite calls for her to step aside because she is an Establishment figure.

It was suggested the former High Court judge had to step down because of claims that her late brother, the ex-Attorney General Sir Michael Havers, tried to prevent former MP Geoffrey Dickens airing claims about a diplomat in Parliament in the 1980s. "I know absolutely nothing about it," she insisted, adding: "If people think I am not suitable, then that's up to them."

No 10 and the Home Office highlighted the 80-year-old peer's experience and integrity, stressing she was absolutely the right person to probe into the abuse allegations and how public institutions had failed in their duty of care to children going back 30 years.

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The peer's nephew, the actor Nigel Havers, said Lady Butler-Sloss was "totally honest, totally transparent, highly respected and very, very good at her job" and added: "I don't think the fact that my father was Attorney General at the time makes any difference."

But Labour MP Simon Danczuk, whose questions have helped put the abuse issue centre stage, said: "We want somebody in the chair that exudes confidence, and that's not the case. She is part of the Establishment and that raises concerns, and the relationship in terms of her brother is too close for comfort. That's the conclusion most people will reach. The Government should think again in terms of who they have appointed."

Alison Millar, head of the abuse team at law firm Leigh Day, which represents alleged victims of abuse at institutions who will be examined by the inquiry, also accepted the peer was a person of enormous integrity but also suggested she was too close to the Establishment.

Meantime, the Prime Minister told MPs it "may well be time" to create a new law to make it a criminal offence not to report child abuse. His remarks followed the call by Peter Wanless, the NSPCC chief heading the Coalition's review of how a dossier of alleged abuse went missing at the Home Office, that a new criminal offence should be created to ensure anyone who prioritised the reputation of an institution over child safety should face prosecution.