Media playback is unsupported on your device Media caption "These allegations must not be left hanging in the air"

The prime minister is appointing a "senior independent figure" to look into the way allegations of sexual abuse at north Wales children's homes in the 1970s and '80s were dealt with.

Victim Steve Messham has said that the Waterhouse inquiry of 2000 only covered a fraction of the alleged assaults.

Another of the homes' residents says it did not hear all of the abuse claims.

Earlier, Downing Street said it would investigate Mr Messham's claims of abuse by a 1980s Tory politician.

Correction 10 November 2012: The BBC has apologised unreservedly for broadcasting a report on Newsnight on 2 November over allegations of child abuse which transpired to have involved a case of mistaken identity. As a result the video of the original report has been removed from the website. More details can be found here.

Mr Messham is to meet the Welsh secretary on Tuesday.

Speaking in Abu Dhabi, the prime minister added: "Child abuse is an absolutely hateful and abhorrent crime and these allegations are truly dreadful and they mustn't be left hanging in the air, so I'm taking action today.

"I'm going to be asking a senior independent figure to lead an urgent investigation into whether the original inquiry was properly constituted and properly did its job and to report urgently to the government."

Mr Cameron also urged anyone who knows anything about the allegations of abuse to contact police.

Abuse allegations

Allegations of abuse centred around the Bryn Estyn care home in north Wales and involving almost 40 children's homes in Wales began to emerge in the 1990s, but a report commissioned in March 1994 by Clwyd County Council was never published amid legal concerns.

The-then Welsh Secretary William Hague ordered an inquiry in 1996 into the abuse, which heard from 650 people over three years who had been in care from 1974, and was published in 2000 by Sir Ronald Waterhouse, who died in 2011.

Concerns have now been raised that the remit of the inquiry had been too narrow and that it had failed to consider allegations about children being taken out of the homes to be made available to abusers.

Speaking on BBC Newsnight on Friday, Mr Messham said he believed the Waterhouse inquiry had not heard all the available evidence.

"I don't understand why on earth we had an inquiry if we had to leave out 30% of the abusers, and basically I was told to do that. I was told I couldn't go into detail about these people, I couldn't name them, and they wouldn't question me on them."

"They didn't give me a reason, they just said 'you were not allowed to do so'."

A source close to Mr Hague - who is now foreign secretary - has told the BBC that no concerns were raised with him about the terms of the inquiry he established when he was Welsh secretary, and that as the report was published more than two years after he left office, his successor could have changed those terms.

Keith Gregory, a Wrexham county borough councillor, told the BBC he was sexually, physically and mentally abused at Bryn Estyn in the 1970s, by staff and others from the local community.

He said he was "shocked and really devastated" that the Waterhouse inquiry had not looked into allegations children had been brought out of homes to be made available to abusers.

"It needs to come out, it's got to come out," he said, adding that he supported a new inquiry "to look into some of the things that were missed".

He also called for the abusers to be placed on trial, adding that names of alleged abusers which had been given to the Waterhouse inquiry had been left out of the final report "because they were only interested in care workers and the staff of Bryn Estyn".

Mr Gregory said the abusers included MPs, solicitors, judges, factory directors, shopkeepers and serving police officers.

Counsel for the Waterhouse inquiry mentioned the existence of a "shadowy figure of high public standing", but said that there was no substantial evidence to support the allegations.

The inquiry identified 28 alleged perpetrators but they were never identified in public.

Transparency call

A spokesman said the government would now hold talks with the opposition and the Welsh assembly to establish the terms of reference of the new investigation before further details were announced.

Image caption The abuse centred around the Bryn Estyn children's home in north Wales

Shadow home secretary Yvette Cooper said: "It is imperative that a robust and thorough criminal investigation into child abuse at north Wales children's homes should get under way and the allegations of every victim must be pursued."

In an open letter, Labour MP Tom Watson, who initially raised allegations in Parliament, has called on Mr Cameron to go further and establish a special police investigation into what happened.

Wales' Children's Commissioner Keith Towler said Mr Messham's claims had to be taken seriously and the police and other authorities should be given the opportunity to investigate.

However, Welsh First Minister Carwyn Jones said there needed to be more than one complainant to merit another abuse inquiry.

Mr Towler and Mr Jones will meet on Tuesday to discuss the case.

North Wales Police said it was also seeking to establish whether there were any allegations that required new or further investigation.

The BBC's Nick Robinson said the government would want to move quickly on the issue because the allegations concerned a once-senior Tory figure, albeit one no longer in front-line politics, and because the original inquiry had been set up under a Conservative government by the current Foreign Secretary, Mr Hague.

Correction 10 November 2012: The BBC has apologised unreservedly for broadcasting a report on Newsnight on 2 November over allegations of child abuse which transpired to have involved a case of mistaken identity. As a result the video of the original report has been removed from the website. More details can be found here.