Eliza Manningham-Buller, the former director general of MI5, stayed away from the funeral of the Conservative minister Peter Morrison over allegations of child sex abuse and his pretence that she was his girlfriend.

Her revealing comments about her “withering” friendship with the former parliamentary private secretary to the prime minister was given at the end of her evidence to the Independent Inquiry into Child Sexual Abuse (IICSA).

Lady Manningham-Buller told the inquiry on Tuesday that she may have been the source of information passed by the security service to the cabinet secretary which included the comment that Morrison had a “penchant for small boys”.

She was then asked by Brian Altman QC, counsel to IICSA, why she had stayed away from Morrison’s funeral in 1995 since she had previously been a friend.

“It’s an insight into my feelings,” Manningham-Buller said. “By the end of the 80s ... my friendship with Peter Morrison was withering.

“He was seeking to give the impression that I was his girlfriend which was not accurate. The allegations [of paedophile activity] which I did not know the truth of ... made me uncomfortable.”

She continued: “I wasn’t sure I liked him much. He had a drink problem. He was very abusive to his public servants and I chose not to go to the funeral.”

Morrison, then MP for Chester, had been the minister for energy as well as trade and industry during the 1980s when Margret Thatcher was prime minister.

Questions of his sexual activities led to correspondence between MI5 and the cabinet secretary, Sir Robert Armstrong, about whether he was a security risk.

At one stage, the inquiry heard, Morrison was discouraged from visiting Russia in case he was blackmailed. On a visit to China, it was arranged that he should be accompanied by officials to avoid problems.

Earlier, Morrison’s departmental private secretary, Susan Hogg, told the inquiry: “He clearly had an alcohol problem and used to start drinking at lunch time.” He often got through a bottle of vodka by tea.

He had a temper, she added, and used to be in a bad mood particularly when required by Buckingham Palace to escort Princess Margaret.

On occasions, Hogg said, she used to take phone calls from Morrison when she was still in the department in the evening. “There would be giggling in the background and he would say: ‘Stop it, Eliza. Stop it Eliza.’ I thought she was his girlfriend.”

Morrison was infuriated by the language used by civil servants, calling them “Martians”. He asked her to retype their memorandums, she explained, so that they were no longer written in “Martian”.

Lord Armstrong, as he now is, also appeared before the inquiry and confirmed that Margaret Thatcher had been aware of the rumours but that she had supported Morrison in the absence of any criminal prosecution.

“I took it from the fact that [Margaret Thatcher] didn’t appear to want me to take any further action that she was being fully informed by the [Conservative] party,” Armstrong said.

“I think it was up to the Conservative party as to whether they took the rumours sufficiently seriously to report them to the police. I thought the police had been aware. I was certainly not aware of any cover-up. Morrison has emphatically denied the allegations.”

Lord Armstrong said that Thatcher had evidently not considered the rumours to be true because she appointed him as her parliamentary private secretary in 1990.

Richard Scorer, a solicitor at the law firm Slater & Gordon who represents victims at the inquiry, said: “The Peter Morrison case is a shameful saga of institutions avoiding responsibility despite widespread rumours about his ‘penchant for small boys’.

“It appears police knew of allegations, but did nothing. Security services knew. Cabinet secretary knew, but thought it was for prime minister & Tory party to deal. The prime minister took no action. The Tory party did nothing. What we see here is buck passing across the board and Morrison escaping scrutiny because of his connections”.