A security review was launched last night after a campaigner dressed as Batman thwarted armed police to scale Buckingham Palace and hold a five-hour protest beside the royal balcony.
Ministers, senior police officers and royal security officials were under pressure to explain how Jason Hatch, a member of the group Fathers4Justice, was able to penetrate palace security measures with such apparent ease.
Sir John Stevens, the commissioner of the Metropolitan police, accepted that the episode, which took place in the glare of the world's media, was embarrassing. He demanded a full report.
In a statement to the Commons last night, the home secretary, David Blunkett, said police took the "entirely correct decision" in identifying Mr Hatch as a protester and not a terrorist.
He said the Met commissioner, Sir John Stevens, had stated that if the intruder had been assessed as a threat he would have been shot before he entered the building.
He called the intrusion "a publicity stunt" and "a foolish and silly thing to do which harms a very reasonable cause".
Mr Hatch, 32, who claims he is denied access to two of his children, and a fellow activist, Dave Pyke, who was dressed as Batman's sidekick, Robin, scaled the 7.5 metre (25ft) walls of the palace using a ladder after climbing over a one-metre fence yesterday afternoon.
While other members of the campaign group caused a diversion at the front of the palace, the pair clambered up the ladder at a corner of the building.
Mr Pyke came down when he was challenged by armed officers but Mr Hatch managed to get on to a ledge and work his way round to the front of the building, where he unfurled a banner.
Mr Hatch, who has four children by three women and changed his name by deed poll after joining Fathers4Justice, ignored the demands of police negotiators to stop his protest until 7.15pm when he agreed to be brought down on a cherry picker. He was arrested on suspicion of causing criminal damage.
A Scotland Yard spokesman said that Mr Hatch was then seen by paramedics after he told police he had "a pre-existing and unrelated head injury". He was taken to St Thomas's Hospital, where he was examined.
The incident is a blow to the authorities, coming as it does after a string of breaches involving the royal family and at a time when the terrorist threat means security measures should be at their tightest.
Sir John said there was "no doubt" the incident was embarrassing. He said: "I've asked for a full report on my desk tomorrow morning. We've got to resolve the situation."
Speaking on Radio Five Live, the commissioner said the alarms and CCTV cameras had worked. He added: "The police response was speedy but he got inside the perimeter. It's not good enough and we want to know how this happened."
Central to the inquiry will be the new royal director of security liaison, Brigadier Jeff Cook. He was taken on after royal security was breached by a Daily Mirror reporter, who got a job as a palace footman, and by the comedian Aaron Barschak, who gatecrashed Prince William's 21st birthday party at Windsor Castle.
The incident also has echoes of the security lapse which allowed Michael Fagan to reach the Queen's bedroom in 1982.
The shadow home secretary, David Davis, said: "It beggars belief. When the threat from terrorism is at an all-time high it is worrying that episodes like this can still take place. It is clear that the lessons of previous incidents have not been learned."
The Liberal Democrat home affairs spokesman, Mark Oaten, said: "This is another embarrassing break down in security at the palace. After so many episodes, there must be serious questions asked over the ability of our authorities to protect the royal family."
Fathers4Justice was delighted at the publicity. That it had managed to get the issue of fathers' rights back in the spotlight was illustrated by Downing Street's speedy response.
The prime minister's official spokesman said: "We don't believe that events like this actually help address the problem."
But he added: "Everybody accepts that this is a very, very difficult issue. It is an issue which is complex, it involves strong emotions and huge sensitivities and therefore has to be tackled in a sensitive way."
Yesterday's demonstration was timed to coincide with the trial of one of two fathers' rights protesters who allegedly hurled condoms filled with purple flour at Mr Blair during prime minister's questions.
Supporters of Mr Hatch fear his protest will lead to a jail sentence. His father, Roger Tunnicliff, 61, said: "I have been right behind him from the start. They have a good cause and I support it. I hope he makes a difference. He's doing it for a lot of other people. I warned him he might go to prison one day, but he's got his mind set on it."
Fathers4Justice last night vowed to go ahead with more protests. Mr Hatch was spending the night at a police station in central London, while the Queen asked to be kept informed of developments.