The chairman of a Liverpool children's hospital which stockpiled the organs of more than 800 children without their parents' permission resigned yesterday after an admission that a child's heart, brain and lungs have been lost.

The Health minister Lord Hunt of Kingsheath demanded and received the immediate resignation of Frank Taylor from Alder Hey hospital after the parents of 10-day-old Stephen White-Conlin, who died eight years ago, were told that the organs could not be found, 48 hours before the second funeral they had planned for him this afternoon.

Lord Hunt demanded a report into the lost organs by the end of today and said the treatment of the child's family was "totally unacceptable". Lord Hunt said: "I will not tolerate this kind of poor management in any NHS hospital."

Stephen's mother, Julie White, 33, of Crosby, Merseyside, said undertakers had informed her on Tuesday that Alder Hey was ready to release the organs. "I am disgusted. It is just like reliving everything," she said.

The White-Conlins found outonly last year that Stephen's organs had been removed andsaid his second funeral was planned after the hospital had told them, in September, that the organs were available.

The hospital was unable to explain how it could have lost them in the intervening six months. "At this stage, we cannot say precisely what happened but we believe these organs, which were very small, have been mistakenly disposed of," a spokeswoman said.

Last December, Alder Hey apologised for the removal of organs, without parental permission, by a pathologist, Professor Dick van Velzen. The organs, from children who died between 1988 and 1995, were stored in a cellar.

A public inquiry into the affair ordered by the Secretary of State for Health began hearing evidence last month and the Chief Medical Officer is investigating the issue of organ retention. The hospital has returned organs to 250 families since September.