Children's Minister Margaret Hodge has said sorry to the sex abuse victim she branded "extremely disturbed".
Hodge: 'Genuinely sorry' for comments
Mrs Hodge said she would like to "apologise unreservedly" to Demetrious Panton for the description.
She had made the remarks in a letter of complaint to the BBC about an inquiry into a child abuse scandal in London's Islington where she was council leader.
But Mr Panton said Mrs Hodge should "do the decent thing" and resign. The Conservatives also said she should go.
In her letter to Mr Panton on Friday, Mrs Hodge wrote: "I am sorry for the distress caused to you in recent days. I'd like to apologise unreservedly for using the words 'is an extremely disturbed person' with reference to you.
"I assure you that I will not repeat these words again."
The minister said she knew Mr Panton had "suffered appalling abuse" in the 1970s and would rightly feel "angry and let down after so many years of being disbelieved".
She had never sought to "belittle or invalidate" the experiences of sex abuse victims, she said.
"I wish you all the best for the future and am genuinely sorry to have contributed to your suffering," the minister added.
Mrs Hodge led Islington Council from 1982 to 1992, when it emerged that children in the council's care had been abused.
She has been accused of failing to act, despite receiving warnings - an allegation she denies.
'In the dark'
Mr Panton welcomed the apology, but suggested it may have more to do with "legal and political expediency" after he threatened to sue.
The 35-year-old philosophy graduate, whose job now includes advising the Office of the Deputy Prime Minister, said: "In the last five days, I have experienced personally politics of the gutter.
"I personally think that's not the kind of politics that we expect from the
minister of state for children."
He added: "I believe Mrs Hodge has done the right thing in apologising to me, but I believe she should do the decent thing by resigning."
Liz Davies, who was a social worker in Islington while Mrs Hodge was council leader, also said Mrs Hodge should resign for giving "a very dangerous message" to child abuse survivors.
'Won't go away'
"If they begin to want to talk about abuse they're suffering, they've got an image of a government which might well label them disturbed," she told BBC2's Newsnight.
Child law specialist Alan Levy QC also questioned Mrs Hodge's position, saying too many people remained angry about events in Islington.
"It simply isn't going to go away. It isn't going to dissipate, people aren't going to pat her on the head and say 'oh you've apologised, everything's fine'.
"It's too serious, in my view."
Sources close to Mrs Hodge indicated she may make a public statement of apology, a contribution to a children's charity and pay Mr Panton's legal costs.
Earlier, Mr Panton's solicitor said this would be sufficient to end the matter.
Mrs Hodge's "extremely disturbed" comments came in a letter to BBC chairman Gavyn Davies, read out on Radio 4's Today programme.
Mrs Hodge said the letter was never meant to be published.
A Downing Street spokesman dismissed speculation she would be sacked by Tony Blair.
"He appointed Margaret Hodge to this job. The fact that she continues to do
that job, and will continue to do that job at the end of today, I think indicates the prime minister's confidence in her ability."
Hilton Dawson, who co-chairs the all party parliamentary group for children, said it was "vitally important" Mrs Hodge stayed.
But he told the BBC: "The incidents of this week have been really unacceptable. Margaret Hodge has plainly made an extremely hurtful and offensive remark and she needs to sort that out."
Tory health and education spokesman Tim Yeo stood by his earlier call for Mrs Hodge to quit, despite her apology.
Mr Yeo said: "The biggest problem in cases of child abuse is to get the
victims to have the confidence to come forward.
"If they feel that if they do come forward that they are going to be branded
by the minister responsible as disturbed people, what does that do to the chances of us being able to uncover more cases of child abuse?"