The Honours Committee received anonymous allegations of child sexual abuse against Jimmy Savile in 1998, an inquiry has heard.
The Westminster strand of the Independent Inquiry into Child Sexual Abuse heard that civil servants were wary of Savile's reputation as far back as 1984.
The inquiry saw letters between then-head of the Honours Committee and Margaret Thatcher's secretary resisting calls for Savile to be knighted despite pressure from the Prime Minister.
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Lord Robert Armstrong wrote: “Those of whom I have consulted now consider that a knighthood for Mr Savile would give rise to enough unfavourable comment to risk bringing the honours system into disrepute.”
He cited interviews with Savile published in the Sun the previous year where he boasted about having people beaten up, sleeping with hundreds of girls and giving recommendations to a suicidal man on how to take his own life.
There is no evidence to suggest Mrs Thatcher was made aware of any allegations of child abuse about Savile.
Honours system 'protected itself rather than victims'
Mrs Thatcher's secretary was told rumours about Savile's personal life could bring the honours system into 'disrepute'.
The inquiry heard that in 1998 the Honours Committee received an anonymous letter referring to “reports of a paedophilia nature” and rent-boy use about Savile.
It added: "While within limits and bounds homosexuality can be rationalized in a modern society, we must not lose sight that paedophilia goes beyond any boundaries which right-minded people of whatever political persuasions find abhorrent."
Honours and Appointments head Helen MacNamara said she did not know why the letter was not further investigated or passed to the authorities.
The inquiry had previously heard how allegations about MP Cyril Smith and former high commissioner to Canada Peter Hayman had been ignored by the Honours System.
Ms MacNamara admitted it would be “fair criticism” to suggest the honours system had historically protected itself rather than considering victims.