The Home Office channelled £30,000 to a paedophilia advocacy organisation in the late 1970s, according to a former civil servant.
The Independent Inquiry into Child Sexual Abuse heard that a payment to the Paedophile Information Exchange (PIE) was marked on official documents as a grant to the Women’s Royal Voluntary Services.
Tim Hulbert, who worked for the Voluntary Services Unit during the 1970s and 1980s, told the inquiry he was warned to “back off” by a superior when he raised the issue.
Mr Hulbert said: "He acknowledged we were talking about PIE, he said it was an appropriate organisation - a campaigning organisation.
"And however much you might dislike what they were campaigning on, they had a perfect right to do so."
The payments were allegedly concealed on a spreadsheet as a payment to the Women’s Royal Voluntary Services.
Mr Hulbert said he had been made aware by a colleague during an “informal chat” that the money was actually intended to go to PIE.
The Paedophile Information Exchange was a legal campaign group established in 1974 to advocate for the abolition of the age of consent.
A 1975 PIE leaflet said: “We want to dispel the myths connected with paedophilia, and show that most paedophiles desire gentle, loving and mutually pleasurable relationships.
“We believe it is inhumane to children to outlaw their sexuality and we support moves to lower the age of consent.”
The group closed down in 1984 following the conviction of two former executive committee members on child pornography charges.
Civil servant Mike Box told the inquiry that no evidence of any payment to PIE had been found in government documents from the era, and that a contemporary of Mr Hulbert had no recollection of the payments.