Downing Street today refused to say if Theresa May knew of contested claims that the former head of the child sex abuse inquiry had made shocking comments about ethnic minorities.

Dame Justice Lowell Goddard, who resigned as head of the national public inquiry into child abuse in August, is facing toxic claims that she made racist remarks about multicultural Britain.

The allegations reported by The Times have been strenuously denied by the judge, amid suggestions that she is the victim of false slurs.

No10 refused to say whether Mrs May - who set up the inquiry as Home Secretary and appointed New Zealander Dame Lowell as chair - was aware of the allegations previously.

It has been claimed that Home Office officials knew of the judge's allegedly offensive remarks - said to include a suggestion that Britain had so many paedophiles 'because it has so many Asian men' and complaining about having to travel 50 miles from London to see a white face.

Dame Lowell Goddard resigned as head of the Independent Inquiry into Child Sexual Abuse in August as it was understood she wanted to return home, and has now been accused of saying Britain had so many paedophiles 'because it has so many Asian men'. The allegations have been strenuously denied by the New Zealand judge

The PM's spokeswoman pointed to statements from the Home Office stressing that it would not be drawn on 'confidential HR matters'. 'I am not going to add to the Home Office with regard to the allegations that are being quoted,' the spokeswoman said.

According to the newspaper report, Dame Lowell is alleged to have told a colleague: 'I was so shocked to see the number of ethnic people.'

It is also claimed that she flew into expletive-ridden rages and treated inquiry staff at Millbank Tower with contempt.

'She behaved like a monstrous tyrant and we were all horrified and saying this can't be allowed to carry on, but internally we felt paralysed,' a source is quoted saying.

It is alleged that the judge, who has no legal training in the UK, was warned by a senior official about her use of racially derogatory language. Home Office staff and advisers were told about her behaviour, it was claimed.

Insiders said Dame Lowell, 67, also appeared to have memory lapses and failed to grasp legal concepts. But no action was taken, leaving the inquiry in turmoil. Under the terms of her appointment in February last year only the Home Secretary had the power to sack her.

She finally quit in August after 18 months, walking away with a severance package worth £90,000 approved by the Home Secretary Amber Rudd.

Dame Lowell was also reported to have voiced shock at the size of the UK' ethnic minority population and allegedly complained of having to travel miles from London to see a white face

PM Theresa May set up the Inquiry into Child Sexual Abuse and appointed Goddard as chair

Last night Dame Lowell's lawyers issued a vehement denial that their client had made any racially derogatory remarks or displayed rage.

They said she was 'always of the opinion that the inquiry must properly acknowledge people's ethnicity and otherwise employ race and gender neutral language at all times'.

What the hell is going on with this inquiry? I'm shocked and distraught about this development. This is an inquiry supposed to be getting to the truth, instead it has been cover up upon cover up Andrew Lavery, of the victims group White Flowers Alba

They also denied that she was told that further action would be taken if she continued to make such comments. It was also untrue, they said, that the judge treated junior staff in an abusive fashion. She had very little contact with them.

They denied that Dame Lowell was an incompetent lawyer or leader.

Victims reacted with horror to the allegations last night, questioning whether an inquiry which has been tasked with uncovering institutional child sexual abuse can continue when it is accused of such a monumental cover up.

Questions will also be asked of the new chairman Professor Alexis Jay, who was a panel member until Dame Lowell resigned.

The Times claimed that staff at the inquiry held a secret meeting with Mark Sedwill, the Home Office permanent secretary, shortly before Dame Lowell stood down.

Dame Lowell resigned as head of the national public inquiry into child abuse in August

CONTROVERSIAL INQUIRY DOGGED FROM THE START Right from the beginning, the child sex abuse inquiry has been dogged by resignations and controversy. Its first chairman was Baroness Butler-Sloss, who stood down in July 2014 after only a week in the job. Questions were raised about her connections with establishment figures. Her late brother, Lord Havers, was attorney general in the 1980s – a crucial period under examination by the inquiry. Her replacement, Dame Fiona Woolf, was also appointed by Theresa May when she was home secretary. Dame Fiona, too, was forced to resign after criticism of her establishment links, most notably to former home secretary Leon Brittan, who was facing questions over his actions at the Home Office. Dame Lowell Goddard resigned after a row over her pay and benefits package. Child protection expert Professor Alexis Jay, the fourth chairman of the inquiry, took over in the summer. In a further blow to the inquiry team its most senior lawyer, Ben Emmerson QC, was suspended last month after disagreements with Professor Jay. He later resigned. Mr Emmerson's deputy Elizabeth Prochaska, the inquiry's junior counsel, announced her resignation at the same time as her boss. Advertisement

Last night Andrew Lavery, of the victims group White Flowers Alba, told the Mail: 'What the hell is going on? This is an inquiry supposed to be getting to the truth, instead it has been cover up upon cover up.'

Victims are already reeling from the series of departures from the investigation, which is expected to drag on for a decade as lawyers examine claims of sex abuse at dozens of institutions over 60 years.

Dame Lowell, who was the third chairman to quit, went after it emerged she spent three months of her first year either on holiday or abroad. She gave no reason for the resignation but Home Secretary Miss Rudd said of her that was 'a long way from home' and she 'found it too lonely', 'that's all the information I have'.

In a severance deal, which brings the total amount paid to Dame Lowell during her 18 months in charge to almost £700,000, she was paid two months' salary plus allowances, amounting to more than £80,000, plus the price of two business-class tickets back to New Zealand for her and her husband after she quit in August.

The judge, who was hired by Mrs May when she was Home Secretary after the resignations of two previous chairmen, negotiated one of the most generous financial packages in the public sector.

Her salary was £360,000 per year and the deal included a £110,000 rental allowance for an apartment in Knightsbridge, plus £12,000 for utility bills and the use of a government car and driver. Return flights to New Zealand for her and members of her family were also part of the package.

Last night an inquiry spokesman said: 'It would be inappropriate to comment. All employees have a right to expect confidentiality in relation to HR matters.'

Questions will also be asked of the new chair Professor Alexis Jay (pictured), who was a panel member until Dame Lowell resigned. Professor Jay is the fourth inquiry chair to be appointed

The Home Office declined to comment other than to say: 'The Independent Inquiry has a vital role to play in exposing the failure of public bodies and other major organisations to prevent child sexual abuse.'

Last night Dame Lowell confirmed she had instructed London solicitors Carter Ruck to represent her over the claims.

At her apartment in Wellington, New Zealand, she said: 'Obviously I have instructed defamation lawyers and that will need to take its course. I will only speak through the lawyers.'

With her husband, retired QC Chris Hodson, beside her, Dame Lowell refused to be specific about what action Carter Ruck would take but said: 'I'm taking their advice, that's all I can say.'