But critics have claimed the judge cannot be impartial because her late brother, a former Attorney General, played a key role in the affair in the early 1980s, and it has also been claimed she kept allegations about an Anglican bishop out of a report she wrote three years ago into a paedophile scandal in the Diocese of Chichester.

Lady Butler-Sloss led a panel of three judges who overturned a previous ruling which said councils could warn other local authorities about two men who had been found to have had inappropriate relationships with children.

Neither man had been convicted in a criminal court but in civil proceedings judges had ruled they had been involved in improper sexual relationships with children.

One man, who can only be identified by the initial ‘L’, then 36, was acquitted of attempting to rape his step-daughter and of indecently assaulting his five children but care proceedings in the family courts later found he had been responsible for sexual abusing three children in his care.

He posed a “significant risk” to the three youngest children, the court held.

Croydon council, in south London, where L had lived, sought to secure L’s new address from the court to alert the local authority about his sexual behaviour.

A judge ruled in 1997 that Croydon could go ahead but Lady Butler-Sloss overturned that decision the following year.

Hannah Miller, Croydon’s then director of social services, said at the time: “This is a bleak day for social services departments across the country in their crackdown on child sex abuse.”

In the second case, a man only known as ‘W’ was found by Bournemouth county court in 1997 to pose a risk to children he coached at a junior football league.

A judge found “overwhelming evidence of an unusual and unhealthy relationship” between W and his partner’s youngest son.

W was a “risk of significant harm” to his partner’s sons and Bournemouth social services put restrictions on his access to the children and asked the courts permission to write warning letters to the football club and the football league.

A judge approved Bournemouth’s application but this, too, was overturned by Lady Butler-Sloss.

With Lord Justice Hutchinson and Lord Justice Chadwick she ruled it was inappropriate to disclose information which had emerged as part of family court proceedings under the Children Act. Appeals by L and W were allowed.

Robert Hutchinson, of the Association of Directors of Social Services, said at the time: “This decision has major ramifications for all of us [with] public protection responsibilities. The commonsense approach would be to share information about people considered a danger to children.”

The NSPCC also voiced its concern about the ruling, as a spokesman for the children’s charity said: “information such as this should be passed on to parties who need to know in orderto give children protection.”

Lady Butler-Sloss went on to become the most senior judge in England and Wales dealing with child abuse and other family issues, as president of the family division of the High Court from 1999 to 2005.

The way local authorities and police shared intelligence about suspected sex offenders was later the focus of an inquiry into the murders of Holly Wells and Jessica Chapman, both 11, in Soham, Cambs, by school caretaker Ian Huntley in 2002.

Mark Williams-Thomas, a former detective who presented a television documentary in 2012 which led to Jimmy Savile being exposed as Britain’s worst-ever paedophile, said: “This ruling led to a significant change in attitudes on the exchange of information and it caused real problems.

“In a way, it assisted offenders in the 1990s to get away with their offending behaviour.

“I’m sure [Lady Butler-Sloss] made that finding in the best of spirit, but it would not be something that would be acceptable today. Around that time there was confusion about what could and could not be shared between agencies - but things are clearer now.

“It heaps more pressure on the Government, which must take a very clear stance on this to say that, for the sake of clarity and for the victims, they need to take another look at this appointment.”

Mrs May is understood to have invited to a meeting at the Home Office this week seven MPs who have led the campaign for an investigation into the child abuse allegations.

They are believed to include Simon Danczuk and Tom Watson, the Labour MPs who exposed a series of revelations about alleged paedophilia in Westminster, and Tessa Munt, the Liberal Democrat who last week disclosed she had been abused as a child.

Several of the members attending the meeting will ask Mrs May to reconsider Lady Butler-Sloss' appointment, sources said.

A Home Office minister has refused to rule out appointing a co-chairman to lead the child sex abuse inquiry alongside Baroness Butler-Sloss, as new detail emerged of her role in a controversial paedophile ruling.

James Brokenshire, the security and immigration minister, insisted the Government was still working out the “precise detail” of the inquiry which will examine allegations of a wide-ranging cover-up of paedophilia in Westminster and other British institutions.

Asked by Dermot Murnaghan on the Sky News channel if the panel members would have “equal powers” or be “co-chairs”, Mr Brokenshire said: “Well I think it’s this precise detail that we are working on at this stage because it is important that we do draw on the right experts.”

If ministers appoint another senior figure to sit alongside Lady Butler-Sloss it would be seen as recognition of concerns over the peer’s impartiality.