The woman - now in her 30's and who cannot be named - sued Southwark LBC over abuse meted out by care-worker, Alan Essex, at the Ivydale Children's Home in the early 1980s.
She was initially 'abandoned' by her abusive father in 1980 while drunk at a party, before being taken into local authority care and placed temporarily with foster parents, the high court heard.
While in foster care her claims of sexual abuse by her father were first relayed to the local authority, but her counsel, Elizabeth-Ann Gumbel, said social services 'appear to have been at a complete loss as to how to deal with this'.
She was unable to settle with the foster family due to her troubled past, and was subsequently placed for a trial period at Ivydale where she was indecently assaulted by Essex on the night of her arrival.
Ms Gumbel said the woman had been 'brave enough' to report the abuse at the time, but added: 'Despite the fact that others had previously reported abuse by Mr Essex, no police investigation was instigated by the council at all.'
The woman was left psychologically damaged by her experiences, the court heard, her trauma compounded by the later ordeal of testifying in the Alan Essex trial.
The woman sued Southwark LBC over the abuse perpetrated by Essex and for allegedly 'failing to protect her' from sexual, physical and emotional abuse meted out by her father.
Miss Gumbel said social workers had been aware of concerns about the family's 'general welfare' as far back as the early 1970's - some years before ill-treatment from her father forced her mother to flee the family home.
The case was settled today, on the third day of the trial, when Southwark agreed to pay out£55,790 in damages.
Defence counsel, Kate Thirlwall, said the council acknowledged the woman had experienced an 'appalling' childhood - one that 'no right-thinking person could ever wish upon a child'.
'For her then to be abused was the last thing she was entitled to expect,' she told the court.
Mr justice Roderick Evans wished the woman well, commenting: 'I hope that drawing a line under these dreadful events will allow her to move on and achieve what she is capable of achieving.'
STRAND NEWS SERVICE