A  lengthy  investigation had failed to produce  evidence  to  justify criminal  proceedings, said Greater Manchester Chief  Constable  James Anderton.

His statement brought renewed calls for all the children, aged between 2 and 12, to be returned from care to their homes.

Mr  Anderton said that inquiries were still continuing into the  cases of  three  youngsters  in the town who were taken  from  home  by  the authorities  a week ago. "No decision can be taken on this  particular aspect,"  he  said.  All 20 children have been made  wards  of  court, although five have been allowed to return home to their parents.  Many of  the  other 15 have not been seen by their parents for  up  to  six months.

Mr  Anderton  said that decisions about the future  of  17  youngsters rested with Rochdale's social services department.

The 17 were taken into care from their homes in a joint  police-social services dawn swoop on dates between March and June this year.

The  announcement  that  there was insufficient  evidence  to  support criminal  proceedings  was welcomed by Mr Peter Thomson  a  member  of Rochdale  Council's social services committee. "I have never  believed there  was anything that was remotely criminal," said Mr Thomson,  who has  been  campaigning on behalf of the parents. "It has  all  been  a horrendous mistake.

"The  excuse  that officials have been hiding behind was  always  that police investigations were continuing. They can't say that any more.

"The children should be returned home and the whole mumbo-jumbo should be stopped."

Mr  Thomson claimed that the children had witnessed horror movies  and had  confused  fiction  of the screen with what they  believed  to  be real-life experiences.

He said: "The children were never involved in witchcraft or  Satanism. It  has all been a ghastly mistake. The families in my judgement  were totally incapable of any of the things which were alleged. No way were they followers of a Satanic cult."

The  children were made wards of court after a six year old  boy  told social  workers  of  babies being stabbed, sheep  being  mutilated  in occult ceremonies, and children being drugged and caged.

Rochdales social services director Gordon Littlemore had claimed in  a statement:  "We  are  dealing with  allegations  of  emotional  abuse, degredation, humiliation, the administration of drugs and exposure  to acts of violence."

He  was due at a meetings with his social services  committee  members tonight to explain why he took the steps he did.

In his statement, Mr Anderton refered to two other investigations into alleged  child abuse - one in Manchester involving  thirteen  children and the other in Salford involving three.

He  said  a  full investigation had taken place  into  the  Manchester allegations as a result of which two men had been charged with alleged criminal  offenses.  One had allegedly committed  offenses  against  a woman.  The other man had allegedly carried out a number  of  indecent assaults  against  children. Both men had appeared in court,  but  the proceedings had been discontinued by the Crown Prosecution Service.

In  the  Salford  inquiry, he said, one man had been  charged  with  a number of alleged offenses against children. Mr Anderton said that  he had been remanded in custody to Strangeways prison, but had later died as a result of injuries received in the April 1 riot.

There  was  no evidence to suggest that the Rochdale,  Manchester  and Salford incidents were connected in any way.