James Murdoch last night faced fresh calls to quit as a non-executive director of Sky as it emerged he is stepping down as chairman of sister company Sky Deutschland.

The Local Authority Pension Fund Forum (LAPFF), which advises local councils on pension investments, said it has concerns about his “conflicts of interest” as the son of top Sky shareholder Rupert Murdoch and his “suitability” because of the way he handled the hacking scandal at News Corporation.

Mr Murdoch is standing for re-election as a non-executive director of Sky at the annual meeting in Westminster tomorrow, after resigning as chairman of the FTSE 100 company in 2012 following strong criticism from some Sky shareholders.

However, he was quietly promoted to the role of chairman of Sky Deutschland, a separate company controlled by his father, last year. The younger Murdoch is now relinquishing that role as Sky in Britain is merging with Sky Deutschland and Sky Italia. Sky’s chief executive Jeremy Darroch is taking over as chairman of Sky Deutschland.

LAPFF has opposed Mr Murdoch’s re-election to the Sky board since 2011, but he was re-elected with more than 95 per cent support at last year’s annual meeting.