Retired judge chaired Cleveland abuse inquiry in the late 1980s and was praised for her even-handed approach

Lady Butler-Sloss, the retired senior judge who chaired the Cleveland child abuse inquiry in the late 1980s, has been appointed by the home secretary, Theresa May, to chair the new public inquiry into the handling of child abuse allegations by public institutions.

The former president of the family division of the high court, who coined the phrase "listen to the children" in her Cleveland report, said she was honoured to be asked to carry out "this important work".

May announced in a statement to MPs on Monday that a public inquiry would be held to highlight past failures to protect children from abuse. The inquiry will have a wide-ranging remit to examine "whether public bodies and other non-state institutions" took seriously their duty of care to protect children, the home secretary said.

Butler-Sloss, 80, said: "I'm honoured to have been invited to lead this inquiry. The next step is to appoint the panel and agree the terms of reference. We will begin this important work as soon as possible."

May said: "In recent years, we have seen appalling cases of organised and persistent child sex abuse that have exposed serious failings by public bodies and important institutions. That is why the government has established an independent panel of experts to consider whether these organisations have taken seriously their duty of care to protect children from sexual abuse."

The Cleveland inquiry in 1980s was established after 121 children were taken into care amid suspicions that their parents had abused them. Butler-Sloss was praised for her even-handed approach to the inquiry after paediatricians in Middlesbrough diagnosed a series of cases of child abuse.

In her report, Butler-Sloss said children should be treated as people rather than objects of concern. She recommended that adults should explain what was going on when children were being examined for signs of abuse, and that children should not be subject to repeated examinations.

The findings of the Cleveland report were incorporated in the Children Act of 1989.

On Tuesday a former health minister said powerful people in the 1980s targeted children's homes which served as a "supply line" for paedophiles.

Lord Warner, a health minister in 2003-07 who conducted an inquiry into child abuse in Birmingham in 1992, described the sexual abuse of children as a "power drive".

Warner told the Today programme on BBC Radio 4: "Some of these children's homes were targeted by people in power, powerful people. Indeed, sexual abuse of children is a power drive. That's what a lot of it is about.

"It is possible that people who were authoritative, powerful in particular communities did sometimes have access to children's homes. We know for historical purposes that children's homes were a supply line sometimes."