A FORMER MI5 chief has said it was "shocking" that rumours in the 1980s about a Tory MP's alleged "penchant for small boys" were not passed on to police.

Baroness Manningham-Buller told the Independent Inquiry into Child Sexual Abuse (IICSA) it was not her decision at the time as to whether that should happen.

She said she "must have" passed information on rumours about the late Chester MP Sir Peter Morrison but could not remember specifically having done so.

Baroness Manningham-Buller admitted it was "ironic" MI5's inquiries into the then-deputy chairman of the Conservative Party appeared to come to an abrupt end within weeks of her writing one of two memos stating she had been told by Sir Peter the rumours were untrue and then-Prime Minister Margaret Thatcher was supporting him.

The life peer, who at the time of the probe in 1986 worked for MI5's secretariat, said she had trusted those in positions of greater authority to deal with any investigation into the rumours.

She told the inquiry, sitting in London: "I reported what I heard, it was all hearsay, it was all second hand and I trusted those above me to deal with it appropriately."

Baroness Manningham-Buller said although she had no "independent recollection" of specific rumours she had heard and passed on, it was likely she was the MI5 staff member referred to in a January 1986 letter mentioning that a friend had said Sir Peter had been caught soliciting in a public lavatory and had been lucky not to be charged.

She said: "I think I must have been", adding: "I would have regarded it as my duty to do so."

The inquiry heard she wrote two internal security service memos, one dated November 11, stating Sir Peter "vehemently denied" there was any truth in a story that he had an "interest in small boys" and one on November 13, which said he was hoping the press would publish a story so he could "sue and nail the lies".

A letter later that month from then-MI5 director-general Antony Duff to then-Cabinet Secretary Sir Robert Armstrong subsequently suggested there was "little point in carrying this (investigation) further".

Lead counsel to the inquiry Brian Altman QC asked Baroness Manningham-Buller whether she agreed the investigation appeared to have ended "ironically because of the information that you had passed to your supervisors".

She replied: "It is ironic".

The inquiry heard on Monday from an anonymous MI5 witness who said it was a matter of "deep regret" none of the allegations had been passed to police.

Baroness Manningham-Buller, who was appointed director-general of MI5 in 2002 and served for five years, said it was "shocking" a reference to Sir Peter having a "penchant for small boys" was not highlighted.

She said: "If the - as one wished had been the case - reference to children was given prominence, it would've been to pass it to the police and make sure that they had that information. That should've been what had happened."

She added: "That wasn't my decision".

Baroness Manningham-Buller said while she had been friends with Sir Peter for much of the 1980s, the friendship was "withering" by the end of the decade for a number of reasons including that she suspected he had been giving people the impression she was his girlfriend, "which was inaccurate".

The inquiry continues.