Lady Butler-Sloss told a victim of alleged abuse she did not want to include the allegations in a review of how the Church of England dealt with two paedophile priests because she “cared about the Church” and “the press would love a bishop”, according to The Times.

The peer made the remarks in a meeting with Phil Johnson, who was abused by priests when he was a choirboy, during a private meeting in the House of Lords in 2011, the newspaper said.

It puts fresh pressure on the former High Court judge, who has faced calls to step down after reports that her brother Sir Michael Havers tried to prevent ex-MP Geoffrey Dickens airing claims about a diplomat in Parliament in the 1980s.

In a statement, Lady Butler-Sloss insisted that she has “never” put the reputation of an institution ahead of justice for victims.

She said: “Throughout many years of public service I have always striven to be fair and compassionate, mindful of the very real suffering of those who have been victims of crime or other injustice. I have never put the reputation of any institution, including the Church of England above the pursuit of justice for victims.

“That is why I am honoured to be leading this inquiry into whether public bodies and other non-state institutions have done enough to protect children from sexual abuse. I am assembling an independent panel of experts so that we can begin this important work as soon as possible.”

In a statement Number 10 said:

“[Lady Butler-Sloss] has taken the decision to step down as chair of the panel inquiry. It is entirely her decision. The government's view hasn't changed, that she would have done a first-class job as chair. The reasons for her appointment still absolutely stand in terms of her professional expertise and her integrity, which I don't think has been questioned from any quarter whatsoever, and rightly so.”