BBC director general Mark Thompson has said Moira Stuart lost her regular TV news slot because the traditional role of the newsreader was dying out.
In 2004, Stuart received the Global Diversity Award as a "role model"
TV news was now being presented by journalists who could undertake a wider variety of roles, Mr Thompson told MPs.
He added that talks with Stuart about her future BBC role were taking place and that she remained "very valued and loved" by colleagues and the public.
The 55-year-old, who joined BBC News in 1981, recently left Sunday AM.
Mr Thompson told the House of Commons culture, media and sport select committee that allegations in the press that Stuart was replaced because she was too old were "not true".
'Out of date'
He added that the matter would be discussed at a meeting of the BBC Trust on Wednesday.
Mr Thompson said: "BBC News, News 24 and the radio networks have changed over the years and the traditional role of the news reader, as opposed to a correspondent or presenter, has virtually died out over the services."
"We tend to use journalists across BBC news programmes to read the headlines."
Conservative MP Nigel Evans questioned Mr Thompson about the "appalling decision to sack Moira Stuart".
"Has anyone telephoned you to say 'are you mad?' Moira Stuart is one of the most popular newsreaders on the BBC," he asked.
Moira Stuart pictured with Richard Whitmore in 1982
"If this is how you treat someone who's much loved, I'd hate to see how you treat someone you don't like."
Stuart spent six years reading the news on the BBC Breakfast programme until last May when the role was integrated into the main presenters' duties.
The broadcaster, who was made an OBE in 2001, has recently taken part in other BBC programmes, including the family history series Who Do You Think You Are?
She also had a cameo role in comedy series Extras and was in 1980s show The Adventure Game.
The move to sideline Stuart prompted a number of high-profile figures to speak out in her defence, including Sir Trevor McDonald and former BBC newsreader Michael Buerk.
Stuart began her BBC career in an era when newsreaders were solely responsible for the delivery of bulletins, while journalists worked behind the scenes.
A BBC spokesperson said the advent of rolling news broadcasts in particular, such as BBC News 24, required news presenters to be more versatile, both reading bulletins and being able to deal with breaking news stories live on air.