Elizabeth Butler-Sloss has stepped down as chair of a UK inquiry into allegations of historic child sex abuse within the establishment, Downing Street has announced.
Prime Minister David Cameron's official spokesman said the decision to stand down was entirely Ms Butler-Sloss's.
Her departure comes after the former judge's appointment became the centre of controversy because her brother Michael Havers, who was attorney general and lord chancellor in the 1980s, is alleged to have tried to prevent ex-MP Geoffrey Dickens airing claims about child abuse.
Critics said victims of child sex abuse would not have confidence in an inquiry led by someone from the heart of the establishment.
It is understood that Ms Butler-Sloss informed the Home Office of her decision to step down over the weekend, after which she spoke to Home Secretary Theresa May.
The process of selecting a replacement is beginning immediately, but a new name is not expected to be announced for some days.
Mr Cameron's spokesman said: "She has taken the decision to step down as chair of the panel inquiry. It is entirely her decision.
"The (British) government's view hasn't changed, that she would have done a first-class job as chair.
"The reasons for her appointment still absolutely stand in terms of her professional expertise and her integrity, which I don't think has been questioned from any quarter whatsoever, and rightly so."
In a statement, Ms Butler-Sloss acknowledged that she "did not sufficiently consider" whether her family links would cause difficulties in the inquiry.
She said: "I was honoured to be invited by the Home Secretary to chair the wide-ranging inquiry about child sexual abuse and hoped I could make a useful contribution.
"It has become apparent over the last few days, however, that there is a widespread perception, particularly among victim and survivor groups, that I am not the right person to chair the inquiry.
"It has also become clear to me that I did not sufficiently consider whether my background and the fact my brother had been attorney general would cause difficulties.
"This is a victim-orientated inquiry and those who wish to be heard must have confidence that the members of the panel will pay proper regard to their concerns and give appropriate advice to Government.
"Nor should media attention be allowed to be diverted from the extremely important issues at stake, namely whether enough has been done to protect children from sexual abuse and hold to account those who commit these appalling crimes.
"Having listened to the concerns of victim and survivor groups and the criticisms of MPs and the media, I have come to the conclusion that I should not chair this inquiry and have so informed the Home Secretary.
"I should like to add that I have dedicated my life to public service, to the pursuit of justice and to protecting the rights of children and families and I wish the inquiry success in its important work."
Ms May responded: "I am deeply saddened by Baroness Butler-Sloss's decision to withdraw but understand and respect her reasons. Baroness Butler-Sloss is a woman of the highest integrity and compassion and continues to have an enormous contribution to make to public life.
"As she has said herself, the work of this inquiry is more important than any individual and an announcement will be made on who will take over the chairmanship and membership of the panel as soon as possible so this important work can move forward."