The Prime Minister and Culture Secretary have criticised the £450,000 pay-off given to George Entwistle, calling it "hard to justify", as an official report found the botched Newsnight programme failed to complete "basic journalistic checks".
The former director-general, who resigned on Saturday, has been awarded a full year's pay after bowing out 54 days into his reign, despite normally being entitled to only half that figure.
BBC Trust chairman Lord Patten defended the sum, saying it was "justified and necessary" to allow a clean break and avoid lengthy delays.
The settlement was discussed in Parliament in a further day of drama which saw two senior figures - BBC director of news Helen Boaden and her deputy Stephen Mitchell - step aside from their posts temporarily.
An official report by the BBC's Scotland director Ken MacQuarrie into the Newsnight blunders found there was confusion about who had the ultimate responsibility for "final editorial sign-off" on the story which mistakenly implicated Lord McAlpine in a child sex abuse scandal.
In the report, he said the programme's editorial management structure had been "seriously weakened" as a result of the editor having to step aside over the Jimmy Savile scandal, and the departure of the deputy editor.
Mr MacQuarrie added that there were shortcomings in the quality of the journalism. He said: "During the editorial decision-making process, some of the basic journalistic checks were not completed. Specifically, identification was not confirmed by photograph with the first victim. The second victim could not be traced in order to provide up-to-date corroboration."
Although legal advice was sought over the report, no right of reply was offered to the unnamed individual at the centre of the allegation. The programme featured an interview with Steve Messham, an abuse victim who said a senior political figure of the time abused him. He later said he wrongly identified his abuser and apologised.
Acting director-general Tim Davie earlier began to try to restore confidence in the broadcaster, claiming his role was "to get a grip of the situation".
In the House of Commons, Culture Secretary Maria Miller described Mr Entwistle's pay-off as a "reward for failure" but said ultimately it was a matter for the BBC Trust to decide the figure. The payment was described as "outrageous" by some MPs, and a spokesman for David Cameron said it was "hard to justify".