In a written warning sent to the Times, South Yorkshire Police are threatening "appropriate action" against anyone caught spreading the "malicious rumours" in Rawmarsh.
But furious locals have hit back to insist that Venables HAD been spirited into their midst under the cloak of a new identity - despite outright denials from the police that the baby-killer has been living in the town.
And residents are livid that the police are apparently moving in on their freedom of speech. One said: "We have fought wars for freedom of speech in this country - so what's going on?"
The astonishing twist will further fire a row raging nationally over how much Britons should have been told about the activities of Venables - now apparently under lock and key for alleged pornography offences, after being released early from custody following the horrific killing of toddler Jamie Bulger on a Liverpool railway line, in 1993.
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