A BBC report which wrongly implicated the former Tory treasurer Lord McAlpine in child abuse should never have been broadcast, the corporation's Director General has said.
George Entwistle has described the Newsnight report on the North Wales children's home scandal as "completely unacceptable" and warned that staff involved in the programme shown last week could now face disciplinary action.
ITV News's Political Correspondent Alex Forrest reports:
But he refused to resign over the scandal, which followed Newsnight's shaming involvement in the Jimmy Savile affair, when grilled on BBC Radio 4's Today programme, telling John Humphrys:
Solicitors for Lord McAlpine have indicated they are preparing to sue for defamation, saying their client's reputation had been left in "tatters" as a result of the programme.
Mr Entwistle confirmed an urgent report from BBC Scotland director Ken MacQuarrie into what had happened - which he ordered after the crisis erupted - was due on his desk tomorrow.
"Further action will follow from that - disciplinary if necessary," he said.
But he faced embarrassment when questioned by Mr Humphrys on Today, admitting he was unaware of Newsnight's reporting of the allegations until they were broadcast.
He said he had not seen an advance tweet from the Bureau of Investigative Journalism - which worked on the report - promoting the claims against a senior Tory, nor front page news coverage questioning the allegations.
The BBC Trust later said it had ordered Mr Entwistle - who is yet to give comment to any media outlets on the latest scandal outside of the corporation - to investigate the programme rapidly and was expecting "appropriate action".
Mr Entwistle had yesterday ordered an immediate "pause" in all ongoing Newsnight investigations, while suspending all of the BBC's co-productions with the Bureau of Investigative Journalism.
The Bureau of Investigative Journalism Trustees said they were "appalled" at what appeared to have been a breach of its standards.
The latest disclosures came as another huge blow for the corporation which is still reeling from the Jimmy Savile scandal - including a decision to drop a Newsnight investigation exposing the late DJ as a serial child abuser.
Culture Secretary Maria Miller today demanded the BBC Trust act quickly to restore the corporation's credibility.
Labour deputy leader and shadow culture secretary Harriet Harman said it was clear something had gone "badly wrong" at Newsnight.
"The director general only took over the leadership of the BBC eight weeks ago, but he needs to show decisively that he is addressing the systemic problems which are in evidence here," she said.
The corporation last night "unreservedly" apologised after abuse victim Steve Messham admitted that the man who abused him in the 1970s and 1980s was not Lord McAlpine of West Green.
The 70-year-old peer found himself at the centre of a storm of internet speculation after Mr Messham told BBC2's Newsnight he had been abused by a senior Conservative from the Thatcher era when he was a teenager at a north Wales children's home.
Friday night's edition of Newsnight - which went out under the supervision of a senior news executive - carried a full, on air apology for the broadcast on November 2.
Lord McAlpine yesterday broke cover to issue a vehement public denial of the "wholly false and seriously defamatory" claims against him.
His solicitor, Andrew Reid, criticised the way the programme had broadcast Mr Messham's allegations without stating to whom they referred - sparking the internet storm around his client.
The disclosures are also potentially embarrassing for David Cameron who rushed to order two new inquiries into the north Wales child abuse scandal following Mr Messham's allegations, even though he was out of the country on a visit to the Middle East.