The head of the BBC admitted yesterday it faced a "crisis of trust" after its flagship news programme wrongly implicated a British politician in child sex abuse, just weeks after the Jimmy Savile scandal broke.
Britain's public broadcaster has suspended all investigations by its current affairs programme Newsnight following the report that Director-General George Entwistle has condemned as "fundamentally wrong".
Newsnight was already under scrutiny for dropping an investigation last year into abuse claims against the late Savile, one of the BBC's biggest stars who has now been accused of sexually abusing hundreds of children over four decades.
Last week, Newsnight reported allegations by a man, Steve Messham, that he had been repeatedly abused by a senior Conservative party figure from the 1980s when he was a teenager living in the Bryn Estyn children's home in Wales.
Although the programme did not identify the politician, it sparked a frenzy of speculation leading to former Tory party treasurer Alistair McAlpine, an aide to Margaret Thatcher, being widely named on social networking websites.
McAlpine went public on Friday to strongly deny the claims, and hours later Messham said after seeing a photograph of McAlpine that he had been mistaken.
Messham offered his "sincere and humble" apologies to McAlpine and suggested it was the police who wrongly identified the politician as his alleged abuser back in the early 1990s.
"We should not have put out a film that was so fundamentally wrong," Entwistle said yesterday. "What happened here is completely unacceptable. In my view the film should not have gone out."
In a BBC radio interview, Entwistle said he had not been aware of the programme until it aired, but said it had been signed off by lawyers and senior management.
He confirmed that he has suspended all Newsnight investigations and has asked for a review into what had happened.
Closing Friday's edition of the programme, anchor Eddie Mair summed up the grim mood with the sign-off: " Newsnight will be back on Monday. Probably."
Entwistle said it would be "absolutely disproportionate" to consider closing down the 32-year-old programme.
But he admitted that the row has damaged the corporation on the heels of the scandal surrounding Savile, which is the focus of three BBC-commissioned inquiries and a major police investigation.
"This is a bad crisis of trust," Entwistle said.
The British press described the BBC as being in "chaos", and one commentator for The Guardian wrote: "The latest error could not be much more serious for the BBC's journalistic reputation."
Lawyers for McAlpine, meanwhile, said they would be pursuing legal action against "all media who have defamed Lord McAlpine's reputation and published defamatory statements".
The politician blasted the claims as "wholly false and seriously defamatory".