Lord Steel has resigned from the Liberal Democrats and will resign from the House of Lords after an inquiry into child sex abuse claimed the political establishment turned a "blind eye" to allegations.

Former Liberal leader Steel was criticised in the independent inquiry into child sexual abuse (IICSA) report after he failed to report allegations against colleague Sir Cyril Smith.

Responding to the report, Lord Steel said: "Knowing all I know now, I condemn Cyril Smith's actions towards children.

"Children deserve protection from predators, especially those in authority. Dealing with such cases is the IICSA's legitimate role. I believe in the highest standards of human rights, particularly for young and vulnerable people."

He added: "I regret the time spent on pursuing Leon Brittan, Lord Bramall and others, who it is clear had done no wrong. Not having secured a parliamentary scalp, I fear that I have been made a proxy for Cyril Smith."

Following Steel's resignation, an alleged victim of Cyril Smith demanded he be punished for not acting.

It added that "political institutions have significantly failed in their responses to allegations... Failing to recognise abuse, covering up allegations and actively protecting high-profile offenders, including politicians".

But crucially the report also concludes "there was no evidence of any kind of an organised ‘Westminster paedophile network’ in which persons of prominence conspired to pass children amongst themselves for the purposes of sexual abuse".

Lord Steel and Cyril Smith were not the only politicians to come under fire in the report.

"David Steel should be stripped of his knighthood just like Cyril Smith stripped me," the alleged victim told ITV News.

He says Lord Steel "had an opportunity" to speak out about the abuse, but said he and others "failed us for their own political gain".

He said the party "came first, we didn't come first", adding "David Steel didn't think about us...we were nothing".

He added: "I'm 71 years of age now and I'm still fighting the - I call it the scars that I have to keep because of something that happened to me when I was little and it will never go away."

The IISCA report said on Tuesday there was "a political culture which values its reputation far higher than the fate of the children” previously in Westminster.

Senior Conservatives are also criticised over the case of former Cabinet member Sir Peter Morrison, who died in 1995. The report says “senior officials within the Conservative party knew about allegations concerning Morrison for years but did not pass them on”.

When it was alleged that Morrison had been caught by police abusing a 15-year-old boy, the report stated that “the evidence shows his party made efforts to suppress these rumours rather than conduct a formal investigation”.

Knowledge of the allegations went to the very top of the government. The report said "Margaret Thatcher was aware of rumours about Morrison but did nothing" and neither did Party Chairman Norman Tebbit, MI5 or the Cabinet Office.