THE troubled child abuse inquiry panel could be disbanded in order for a new, more powerful, body to take over, Theresa May has indicated.

The Home Secretary has written to the panel's members setting out her plan for the inquiry to be given statutory powers, including the ability to compel witnesses to give evidence.

But the move has left members of the panel "devastated" that they could face being removed from the inquiry.

Mrs May told MPs last week that she wanted the inquiry - which is without a chairman following the resignation of two previous appointees - to be given extra powers.

That could mean waiting for a chairman to be appointed for the inquiry panel, who would then request statutory powers, or setting up a new inquiry panel under statutory terms.

The third option of a Royal Commission - as some want - would not have the powers of a statutory inquiry under the 2005 Inquiries Act and would be ''legally more risky''.

Previous appointments as inquiry chairwomen Fiona Woolf and Baroness Butler-Sloss resigned following claims about their perceived closeness to establishment figures.

In her letter to the panel members, reported by the investigative website Exaro News, Mrs May said: "I am currently considering these options and I appreciate this has implications for members of the panel."

In a reply to Mrs May obtained by Exaro, panel member Sharon Evans of the child safety group Dot Com Children's Foundation said: "I, like other members of the panel, feel devastated at the prospect of the independent inquiry being halted as it has been made clear to us 'off the record' that the panel will be stood down in the New Year."

A Home Office spokesman said: "The Home Secretary is determined that appalling cases of child sexual abuse should be exposed so that perpetrators face justice and the vulnerable are protected.

"She is absolutely committed to ensuring the Independent Panel Inquiry into Child Sexual Abuse has the confidence of survivors.

"The Home Secretary is also clear that we have to balance the need to make progress with the need to get this right."

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Shadow home office minister Diana Johnson said: "The Home Secretary should be utterly ashamed of the process she has overseen.

"It is now five months since she first announced she would be setting up a wider child abuse inquiry, following pressure from campaign groups and Labour.

"We are now in a position where there is no chair and no panel, while no work has been done on examining the horrible crimes of the past or into the flaws in the current child protections system. Theresa May needs to take responsibility for the utter failure to get this vital work off the ground over such a long period.

"This is not the first time inquiries have been held on difficult and sensitive issues. Neither the Hillsborough inquiry led by the Bishop of Liverpool nor the Bichard inquiry into child protection was mired in this chaos and confusion.

"The Home Secretary has failed time and time again to set up an inquiry which commands the confidence of the public. It seems she must now go back to the drawing board - while five months that could have been used to listen to survivors and to start uncovering the truth have been wasted."