Despite calls from Doreen Lawrence, Theresa May is insisting there is no need for a public inquiry at this stage.
Doreen Lawrence has said it will "take a while to gain trust" after she met with the Metropolitan Police commissioner over smear claims.
A memorial service has been held to mark the 20th anniversary of the racist murder of Stephen Lawrence.
Shami Chakrabarti, director of Liberty, said:
"Doreen Lawrence is a role model and a friend - heartfelt congratulations to her on her richly-deserved appointment to the House of Lords.
"Who can imagine transforming the grief of losing a child into a campaign to reform policing and the wider values of an entire nation? Her calm courage should be an inspiration to everyone."
1/2 Doreen Lawrence has inspired as mother, campaigner and defender of justice, and as peer will inspire the house and beyond
2/2 Doreen will bring a burning authenticity rarely seen or heard to the Palace of Westminster.
Doreen is an example and an inspiration - she will make a fine addition to Labour's team in the House of Lords @labourlordsuk
A Labour source said: "Doreen Lawrence is a hero of modern Britain. The strength and courage she has shown in her fight for justice for her son Stephen has had a profound impact on attitudes to racism and policing.
Her campaigning has changed, and will continue to change, our country for the better.
"Ed Miliband believes voices like hers should always be heard in Parliament."
Doreen Lawrence is to get a seat in the House of Lords in a new peerages list expected to be published tomorrow.
Mrs Lawrence has tirelessly campaigned for justice since the racist murder of her son Stephen, 20 years ago.
She founded the Stephen Lawrence Charitable Trust to support young people from ethnic minority backgrounds to pursue their ambitions, and has been chosen to sit on Home Office and police panels.
It's thought she will sit on the Labour benches as a working peer and will be expected to regularly attend the Lords.
It is understood that she was persuaded to accept a seat in the Lords by Labour's shadow justice secretary Sadiq Khan.
The Labour Party declined to confirm or deny the appointment when approached today.
Former police chief Sir Norman Bettison will be investigated by a watchdog over claims he tried to influence the way a witness gave evidence at the public inquiry following the murder of Stephen Lawrence.
The Independent Police Complaints Commission (IPCC) said today police systems may have been misused and that it would investigate whether commissioning a report on the witness to the Macpherson Inquiry was racially motivated.
However it also said that former undercover officer Peter Francis, who has claimed Metropolitan Police officers were told to look for information to smear the Lawrence family, has yet to respond to the watchdog's request to speak to him.
Chief Constable Mick Creedon, investigating undercover policing methods, says they have found no evidence whatsoever so far that police smeared Lawrence family.
Doreen Lawrence told the Home Affairs Select Committee today that she and her family were uncomfortable with some of the questions they were asked by the Liaison Officers after Stephen's murder.
The mother of murdered teenager Stephen Lawrence has told MPs she does not "know what to believe anymore" amid claims police officers attempted to smear her family.
Appearing before the Home Affairs Select Committee, Doreen Lawrence said she had no confidence in the police and added it was not right for "police officers to investigate each other".
She said: "I have no confidence whatsoever. Over the years, I was beginning to have a level of trust, we had the investigation and the court case... I was beginning to have some confidence.Now I just don't know what to believe anymore."
She added: "You can't have police officers investigating each other. It's proven that's not the right way to do things."
Claims have been made by former undercover officer Peter Francis that attempts were made to find information to smear the Lawrence family following Stephen's murder in April 1993.
Two existing inquiries are to examine the claims - a police investigation into the activities of undercover officers and another into allegations of corruption in the original investigation into Stephen's murder, led by Mark Ellison QC, who is also appearing before the committee.
Deighton Pierce Glynn solicitors, the legal firm representing Duwayne Brooks have published a document reportedly authorising the use of 'covert audio recording'.
Police chiefs admitted on Friday authorising the secret recording of at least one meeting involving the friend of murdered teenager Stephen Lawrence, his lawyer said after the meeting.