- Criticism was mounting Wednesday over the removal of Fred Goodwin's knighthood, with former chancellor Alistair Darling and the Institute of Directors among those condemning the move against the former Royal Bank of Scotland chief.

Writing in the Times, Labour's Darling said: "There is something tawdry about the government directing its fire at Fred Goodwin alone; if it's right to annul his knighthood, what about the honours of others who were involved...?

"If policy is not based on principle but is about individuals, the government will carry on being blown in the wind," he wrote.

The Queen stripped Goodwin of his honour -- given for services to banking -- on Tuesday after a committee of senior civil servants recommended it be annulled, although Goodwin has not been convicted of a criminal offence.

Its removal places Goodwin in a select club that also includes Zimbabwean President Robert Mugabe, Soviet spy Anthony Blunt, and Romanian Communist dictator Nicolae Ceausescu, who lost his honour the day before he was executed.

The committee said Goodwin had brought the honours system into "disrepute" with management which brought the bank to the brink of collapse, resulting in a £45 billion taxpayer bailout in 2008.

Simon Walker, director general of the Institute of Directors, said he was concerned about "anti-business hysteria".

"I don't approve of the decision to strip Fred Goodwin of his knighthood," he told BBC News.

"I don't think it's a business issue -- I think it's an honours system issue. There's a well-established practice where if people are convicted of a criminal offence, they lose their honours that they've been granted -- that's historic and that is appropriate.

"To do it because you don't like someone, you don't approve of someone, you think they've done things that are wrong, but actually there's no criminality, alleged or charged, I think is inappropriate and politicises the honours system."

The move against Goodwin came after current RBS chief Stephen Hester waived a bonus of almost £1 million in shares under intense political pressure. The bank remains 82 percent owned by the British taxpayer.

Both parties in the governing coalition supported Goodwin's humiliation, with David Cameron calling it "the right decision" and leading Liberal Democrats coming out in favour.

Chancellor George Osborne said: "I think we've got a special case here of the Royal Bank of Scotland symbolising everything that went wrong in the British economy over the last decade.

"Fred Goodwin was in charge and I think it's appropriate that he loses his knighthood."

Labour leader Ed Miliband said the move was "only the start of the change we need" in boardrooms.

Honours are usually only removed from people who have been convicted of crimes, but the Cabinet Office said this case was "exceptional" given the scale of what happened at RBS and cited "widespread concern about Fred Goodwin's decisions".

Goodwin was vilified in the press following the RBS bailout and nicknamed "Fred the Shred".

Even the Unite union was critical of the removal of Goodwin's honour, calling it a "token gesture".

David Fleming, national officer of Unite, said: "It is a token gesture to strip Fred Goodwin of his knighthood, but one which will be well received by the thousands of workers who lost their jobs during his rule.

"Nonetheless this will do nothing to bring job security to the staff across the banking sector who continue to work under a culture of excess and greed at the top."