Home Secretary Theresa May faces public inquiry over Lawrence family 'smear' accusations

Former undercover officer Peter Francis says he was told to find 'dirt' that could be used against family

The investigation into Stephen Lawrence's murder in 1993 was dogged by mistakes by police officers (PA)

The Home Secretary faced demands from MPs today to order a public inquiry into accusations that undercover police attempted to smear Stephen Lawrence's family and friends.

Theresa May announced that an examination by the QC Mark Ellison of claims that corruption hindered the original police response to the killing would be widened to cover the fresh allegations.

They would also be scrutinised by an inquiry led by the Derbyshire Chief Constable, Mick Creedon, in conjunction with the Independent Police Complaints Commission.

In a Commons statement in which she promised "zero tolerance of police corruption and wrongdoing, Ms May said the rules governing the authorisation of covert operations would be tightened.

But MPs said the number of disclosures meant the time had come to order separate public hearings to establish the truth of the police handling of the murder investigation.

Yvette Cooper, the shadow Home Secretary, said: "Would it not be better to set out a clear and focused independent investigation into these allegations, which has a precise remit and also the powers to pursue both criminal and disciplinary proceedings?"

Keith Vaz, the chairman of the Commons home affairs select committee, said: "I think the time has come to look seriously at a public inquiry into the use of undercover agents."

Clive Efford, the MP for Eltham, where the murder took place, called for a public inquiry into all the claims, including accusations of corruptions and attempts to smear the Lawrence family. He said: "We will only satisfy the public if that is done independently of the police."

Ms May replied that Mr Ellison's inquiry had been set up following consultation with the Lawrences and insisted he was fully independent.

The Home Secretary told the Commons that legislation would be brought in to ensure police received permission from the Office of Surveillance Commissioners for undercover deployments lasting more than a year.

Officers using pseudonyms would also require permission under the Regulation of Investigatory Powers Act.

She said: "We are determined to ensure we do constantly look at seeing whether any changes are needed to further enhance the oversight and the procedures under which undercover operations take place."

David Cameron said: "These are absolutely dreadful allegations and we can only think of the Lawrence family, who have suffered so much already from the loss of their son. To hear that, potentially, the police that were meant to be helping them were actually undermining them - that's horrific."