Shipman is thought to have killed at least 215 people
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David Blunkett's comment that he was tempted to "open a bottle" when told of Harold Shipman's death has been heavily criticised by prison reformers.
Mr Blunkett told a group of journalists his first thoughts were to celebrate, but realised it was inappropriate.
The director of the Prison Reform Trust, Juliet Lyon, said it undermined confidence in a prison system based on justice, not vengeance.
She said the Home Secretary was responsible for prisoners' safety.
Speaking on Thursday, Mr Blunkett said: "You wake up and you receive a phone call -
Shipman's topped himself.
"You have just got to think for a minute: is it too early to open a bottle?
"And then you discover that everybody's very upset that he's done it."
Ms Lyon commented: "Today the Home Secretary carries responsibility for the safety and security of 73,075 people in prison and any indication that the death of one of them, however notorious, is a cause for celebration must surely undermine confidence in a system based not on
vengeance but on justice."
Relatives' anger
Shipman, 57, was given 15 life sentences to run concurrently for 15 murders, but is thought to have committed at least 200 more.
After Shipman's death, Jane Ashton-Hibbert, whose grandmother Hilda was unlawfully killed by the GP, said she was angry he had been allowed to die.
She told BBC News: "This seems like an easy way out for him. He never showed any remorse or any guilt and that door is now closed to us."
Harry Fletcher, assistant general secretary of probation union Napo, said: "It was a very unfortunate remark that will cause offence to many relatives of the victims who would have hoped that Shipman would one day tell the truth about the murders.
"It was a comment best not made."
Mark Oaten, the Liberal Democrats home affairs spokesman, was also critical of Mr Blunkett's remarks.
"Many families of Harold Shipman's victims were devastated to learn of his suicide - now they will never know why he killed their mum or granny or brother or sister," he said.
"Mr Blunkett has nothing to celebrate in the fact that the Prison Service is incapable of detaining people properly for their crimes, and has an appalling suicide record."