Whitehall sources expect an announcement next week after the issue has been referred to the Cabinet, which meets tomorrow. The Cabinet committee on home and social affairs, chaired by Tony Newton, Leader of the House, heard the proposal for a wider inquiry by William Hague, Secretary of State for Wales, who has been dealing with allegations surrounding a centre in Clwyd, North Wales, which have been highlighted in the Independent. The pressure for a national inquiry was added to by the exposure in the Independent on Sunday of a scandal at a home in Cheshire.
Next week the Home Secretary, Michael Howard, will announce plans for a register of sex offenders, including a paedophile index, as part of a government "law and order" week. John Major will also unveil a revised charter for crime victims. Ministers are considering including a national inquiry into child abuse as part of its crackdown on crime.
There would be cross-party support for a national inquiry into child abuse but ministers are wary to avoid raising public anxiety. It was unclear last night whether the Cabinet will sanction such a move.
The initiatives will be seen as an attempt to respond to regain the law and order initiative from Jack Straw, Labour's home affairs spokesman. Despite criticism of his call for a curfew for under-11s, Conservative MPs have admitted that Mr Straw has been stealing their thunder.
Pressure grew on the Government after disclosures about child abuse in homes in Clwyd. The results of an official inquiry commissioned by Clwyd County Council into the abuse were not published although they recommend a judicial inquiry. Mr Hague told councils that he wanted to publish the report.
Stephen Dorrell, the Secretary of State for Health, who has responsibility for children in residential homes in England, and Home Office ministers were also being consulted about the need for a wider inquiry to quell growing public concern.
Police believe at least 300 children have been sexually assaulted in children's homes in Cheshire, in addition to the child abuse cases in Clwyd.
The police inquiries spread to Merseyside, and they also checked links with Clwyd.
The police interviewed 2,500 inmates of four homes - codenamed Granite, Emily, Bugle and Enamel - who went through the system from the mid-1960s.