The Grenfell Tower inquiry will examine the cause and spread of the fire as well as the actions of Kensington and Chelsea council before the tragedy occurred – but it will not explore broader issues such as the government's social housing policy.
Theresa May insisted that a separate inquiry into wider social issues in the wake of the tragedy which left at least 80 people dead will be set up instead so that key questions do not go "unanswered".
Sir Martin Moore-Bick, the retired judge leading the inquiry into the Grenfell Tower disaster, said that while "it has become clear" that many would like to see the inquiry look into the government's social housing policy, doing so would "significantly" add to the length of time needed to complete its work.
He added that broadening the inquiry to examine such concerns would raise questions of social, economic and political nature which in his view "are not suitable for a judge-led inquiry".
Instead, the inquiry will focus on a series of key issues, such as the history of the building, including its most recent refurbishment and the state of building and fire regulations.
Bick did agree to some suggestions from the recent consultations that the inquiry should look into whether that the response of local and central government to the disaster "was and continues to be appropriate or adequate" and whether arrangements should have been in place for responding to a disaster of this magnitude.
Bick was previously heckled during his first meeting with survivors and residents of Grenfell over accusations he will "do a hatchet job" during the inquiry.
One man could be heard shouting at the meeting: "You're gonna do a Taylor report like for Hillsborough, which was very technical but didn't deal with the wider issues, and it took 30 years for people to be arrested."
Responding the inquiry terms of reference being released, the prime minister said it must be "very clear" that the omission of certain issues relating to Grenfell are addressed.
May said: "It is vital that there is justice for the victims of this appalling tragedy and for their families who have suffered so terribly.
"The terms of reference set out by Sir Martin address crucial issues such as the cause of the fire and the adequacy of building and fire regulations, which will allow the inquiry to get to the truth of what happened and learn the lessons to stop a similar catastrophe happening in the future.
"We are taking action with the housing minister meeting social housing tenants to discuss the challenges they face and we will be setting out further proposals in due course."
Emma Dent Coad, the Labour MP who represents the west London constituency, said the news was "precisely what we feared".
She said: "We were told 'no stone would be unturned' but instead are being presented with a technical assessment which will not get to the heart of the problem: what effects, if any, the lack of investment into social housing had on the refurbishment project."
Shadow housing secretary John Healey added via Twitter: "Deeply unsatisfactory for PM to set Grenfell Inquiry terms of ref to exclude housing policy failings – closing off criticism of govt policy."
A Downing Street spokesperson said: "The prime minister respects the reasons set out by the Chair for not including these in the Inquiry's terms of reference, but is also very clear that should not - and will not - mean the questions raised are left unanswered or are somehow seen as a lower priority.
"As part of this work the government will now consider how best to address the social housing issues.
"The housing minister, Alok Sharma, will personally meet and hear from as many social housing tenants as possible, both in the immediate area around Grenfell Tower but also across the country to help build up a comprehensive picture of some of the immediate issues facing tenants, as well as to identify any common concerns that must inform any national approach.
"There will be a further announcement on this work shortly."