MPs have delivered a scathing assessment of the way the BBC paid off George Entwistle at the expense of the licence fee payer.
The Prime Minister's spokesman has said George Entwistle's £450,000 pay-off is "hard to justify", but it is a matter for the BBC Trust.
Two senior BBC figures have "stepped aside" as a result of a botched Newsnight investigation.
The BBC was too slow to deal with the unfolding Jimmy Savile sex scandal, according to a former high ranking corporation executive.
Richard Sambrook, the former BBC Director of Global News who also served on the corporation's management board, said the BBC was "very slow to spot the toxic nature of the story".
He told Radio 4's Media Show:
I think initially they thought this was about what a BBC contracted performer had done privately a long time ago and 'we'll let the police deal with it', failing to realise it was actually about what may have occurred on the premises with BBC guests for which they shared a responsibility.
As soon as you have a major star who has appeared in lots of programmes accused of paedophilia on the premises it's not something you can say 'Well that's just a matter for the police"'.
Mr Sambrook added that the BBC had suffered from not replacing the role of Deputy Director-General which was eliminated as part of a cost-cutting exercise last year.
Peter Rippon, who stepped aside from his role as Newsnight editor after the programme decided not to run a report on Jimmy Savile's alleged sexual abuse, refused to comment on whether the BBC programme could survive.
Speaking after a meeting with Mario Monti in Italy, David Cameron said George Entwistle's BBC pay-off is "hard to justify".
He added that radical and urgent changes were required - but stressed that that should happen with Lord Patten remaining as chairman of the BBC Trust.
Justice Secretary Chris Grayling has warned that Twitter users who libel individuals on the social networking site face the same laws as newspaper editors.
Mr Grayling told MPs, "It is utterly, utterly wrong that anybody should have their name blackened, inappropriately and falsely, on any form of social media".
Speaking after a report on BBC's Newsnight led to Lord McAlpine wrongly being branded a child abuser, the Justice Secretary said he is "as concerned as anybody else about what has taken place over the last two weeks".
"The laws of libel apply equally to what you publish on your Facebook page or Twitter page as they do in a printed form," Mr Grayling said. "Those who are damaged in that way have full legal redress to try and get proper justice".
Ofcom Chief Executive Ed Richards is favourite to take over the role of BBC Director-General according to William Hill, which is offering odds of 10/11.
The bookmaker has caretaker boss Tim Davie in second spot with 2/1, former BBC Chief Operating Officer Caroline Thomson next with 5/2 and Tony Hall - Chief Executive of the Royal Opera House - in fourth with 5/1.
BBC DG- they think its all over - Tony Hall in at 5/1 4th fav to get Beeb top job.10/11Richards; 2 Davie; 5/2 Thomson; 12 Jackson;100Paxman.From @sharpeangle on Twitter:
Jeremy Paxman is a rank outsider with odds of 100/1, William Hill spokesman Graham Sharpe said.
Former Culture Secretary Tessa Jowell has stressed the crisis at the BBC should not be used as an excuse to "undermine" the case for a public broadcaster.
Writing in The Daily Telegraph, Ms Jowell said the public should be left to run the corporation, though short-term issues such as "the culture of moralistic smugness" must be "urgently addressed".
"This crisis must not be allowed to herald the slow death of the uniqueness of the BBC", Ms Jowell wrote.
"Lord Reith said that the role of the BBC was to 'inform, educate and entertain'. Only radical public ownership will continue to ensure that these values are firmly embedded at the heart of the corporation and restore the trust it needs to overcome this crisis in the longer term", she concluded.
Deputy Prime Minister Nick Clegg told Daybreak former BBC Director-General George Entwistle's £450,000 pay-off is "difficult to justify" and "difficult to explain".
"My reaction was like everybody else's", Mr Clegg said. "Mr Entwistle was offered this money, he did not need to take it and it is up to the BBC to justify, as Lord Patten sought to, why they took this decision".
Asked about calls for Lord Patten to consider his position as Trust Chairman, Mr Clegg told BBC Breakfast, "I don't think it is the time to go round claiming that X person at the BBC should be promoted or Y person should resign".
"Clearly, the BBC is in a very difficult situation and is suffering a real crisis if you like of confidence in parts of the way in which some of the journalism is done in some programmes", he added.
BBC Trust Vice-Chairman Diane Coyle agreed to outgoing Director-General George Entwistle's £450,000 pay-off while watching Strictly Come Dancing at home, The Times (£) reported.
Ms Coyle took to Twitter during the show, writing:
The BBC Trust told the newspaper Ms Coyle took a phone call from Chairman Lord Patten "during the broadcast of Strictly Come Dancing ... and then returned to watching television afterwards".
“Diane Coyle was consulted on Saturday evening as a member of the Remuneration Committee", the Trust was quoted as saying.
Speaking on the Newsnight programme BBC Creative Director Alan Yentob has said that the corporation can not be complacent and when asked about the licence fee he said, "we have to prove that we deserve it, we have to rebuild that trust."
– Alan Yentob, BBC Creative Director
I don't think we can be complacent about any of the events of the last few weeks. This has been a tumultuous few weeks and I think the consequence of the turmoil of the earlier part of this also led to these events on Newsnight in the last few weeks. The confusion the chain of command the fact that some people were acting [in their posts] and some people were having to step back because of the investigation.
Two executives involved with the Newsnight broadcast that wrongly linked a Conservative Peer to child abuse allegations could face disciplinary action, after a BBC internal inquiry concluded there had been "unacceptable" editorial failings involved in the broadcast, reports The Guardian.
BBC sources told the newspaper that Liz Gibbons, the programme's acting editor, and Adrian Van Klaveran, the supervising executive seconded from his job running Radio 5 Live, are expected to face a disciplinary process that could result in them being sacked or exonerated.