Accountancy firm KPMG has announced it is quitting its advisory role on the Grenfell inquiry after campaigners accuse it of a conflict of interest.

KPMG is the auditor of three firms under scrutiny by the inquiry, which has been tasked with investigating the tower block blaze that killed 71 people last year.

Over the weekend, campaigners published an open letter accusing the accountancy firm of a conflict of interest and calling on Theresa May to ‘reverse the decision to appoint KPMG as advisors to the Grenfell Tower inquiry.’

The letter highlighted the fact that KPMG audit Celotex, the parent company which produced the flammable cladding, as well as being the auditor of the Royal Borough of Kensington and Chelsea and Rydon Group, the principal contractor.

‘Government must recognise that appointing advisors so closely associated with firms under inquiry can only further fuel rumours of a deliberate cover-up and erode public trust,’ the letter said.

Signed by, among others, the pop singer Lily Allen and the co-chair of the Green Party Jonathan Bartley, the letter concluded: ‘It is entirely inappropriate to reward RBKC auditors KPMG with Grenfell Tower inquiry work and we urge Government to reverse the decision and to cancel the KPMG contract.’

Confirming the inquiry had ended its contract with KPMG, a spokesman said: ‘KPMG was appointed to provide the inquiry with limited planning and programme management during its start up phase, helping the inquiry to make rapid progress in the production of a project plan and related tasks.

‘The company has had no role in the inquiry's investigations or decision-making processes and its contract contained strict confidentiality clauses to ensure that there could be no conflicts of interest.

‘Following concerns expressed by some Core Participants, the inquiry team has discussed the contract with KPMG which has agreed that its work should now cease. The support and confidence of all Core Participants is integral to the work of the inquiry.’

This controversy follows accusations that the inquiry, which will be chaired by the retired judge Sir Martin Moore-Bick, is not representative enough.