MI5 knew the country’s chief prosecutor had covered up a sex abuse inquiry into Cyril Smith but did nothing because it was not its job to expose paedophiles, an inquiry has heard.

Files released by the intelligence agency show it was aware that the Director of Public prosecutions (DPP) had lied to a newspaper over its decision not to prosecute Smith. But it decided not to make the information public because its duty was to ‘defend the realm’ rather than to expose a prominent politicians accused of being a paedophile.

The disclosure came during the first day of hearings into how Smith, the former Liberal MP, was able to abuse boys at Cambridge House hostel and Knowl View residential school in Rochdale. Smith died in 2010, having never faced prosecution.

The Independent Inquiry into Child Sexual Abuse (IICSA) last night released an MI5 briefing note which showed how Sir Thomas Hetherington, the then DPP, had lied to a local newspaper about the existence of a 1970 police inquiry into allegations of gross indecency made against Smith.

Had the DPP admitted Smith had been under investigation, it would have led to a new inquiry and Smith being put on trial in his lifetime.