Inquiry announced into contaminated blood scandal that left at least 2,400 dead

"Thousands of patients expected the world-class care our NHS is famous for, but they were failed," she said in a statement.

"At least 2,400 people died and thousands more were exposed to Hepatitis C and HIV, with life-changing consequences.

"The victims and their families who have suffered so much pain and hardship deserve answers as to how this could possibly have happened.

"While this Government has invested record amounts to support the victims, they have been denied those answers for too long and I want to put that right."

The announcement was welcomed by campaigners who have been pressing for years for an inquiry into the import of the clotting agent Factor VIII from the US.

Much of the plasma used to make the product came from donors like prison inmates who sold their blood which turned out to be infected.

Greater Manchester mayor Andy Burnham - who as shadow home secretary championed the campaign for an inquiry - said the announcement was a "major breakthrough", albeit a belated one for people who had suffered for decades.

"This day has taken far too long in coming. People have suffered enough through contaminated blood. They have been let down by all political parties and public bodies," he said.

"It is now incumbent on those organisations to work together to give the families truth, justice and accountability without any further delay or obstruction.

"It is essential that this inquiry looks at both the original negligence and the widespread cover-up that followed.

"It is also crucial that organisations representing victims are fully consulted on the form, membership and structure of the inquiry.

"Just as with Hillsborough, there must be a 'families first' approach at all times."

The announcement came just two days after six party leaders in the Commons - including Labour leader Jeremy Corbyn and the Democratic Unionists' Nigel Dodds - signed a joint letter calling for an inquiry.

Welcoming the move, Mr Corbyn said the investigation should have the potential to trigger prosecutions.

"It was obviously a serious systemic failure. I think we need the strongest possible inquiry that can if necessary lead to prosecution actions as a result, but above all get to the bottom of it," he said.

"A broad, public, inquisitive inquiry is very important."

Downing Street said they would now open discussions with those affected as to exactly what form the inquiry would take.

"Consultation will now take place with those affected to decide exactly what form the inquiry will take, such as a Hillsborough-style independent panel or a judge-led statutory inquiry," the Prime Minister's official spokesman said.

Carol Grayson, 57, from Jesmond in Newcastle, whose haemophiliac husband Peter Longstaff died in 2005 after contracting HIV and hepatitis C, expressed concern that those responsible would still not be held accountable.

"I don't believe it will apportion blame. Alongside this inquiry, there needs to be a complete police investigation," she said.

Around 4,800 patients are thought to have been infected with hepatitis C from contaminated blood products, while 1,200 also contracted HIV, which can cause Aids.

Campaigners have claimed that officials in the Department of Health became aware as early as 1983 that imported blood products were risky, but the NHS continued to give them to haemophiliacs.

Faced with the threat of legal action, in 1991 the Government made ex-gratia payments to those infected with HIV, averaging £60,000 each, on condition they dropped further legal claims.

The extent of infection with hepatitis C was not discovered until years later.

Following repeated refusals by ministers to set up an official government inquiry, in 2007 the Labour peer Lord Morris of Manchester set up an independent inquiry chaired by the former solicitor general Lord Archer of Sandwell.

In his report two years later, Lord Archer said it had been a "horrific human tragedy" and called on the Government to negotiate a fairer compensation package for those who had suffered.