Dramatic new evidence to the Leveson inquiry this week is expected to unleash a "bloodbath" of bitter recriminations between police and prosecution officials arguing over failings in a series of investigations into allegations of phone hacking, computer hacking and bribery by journalists.

News International (NI) insiders say that the launch of The Sun on Sunday, which appears today, only nine days after Rupert Murdoch's announcement it was to go ahead, was brought forward because to launch a new paper in the wake of fresh revelations would be virtually impossible. But last week a new bout of allegations undermined NI's attempt to seize the PR initiative. It was reported that emails were being deleted until 2010, and yesterday it was reported that the Independent Police Complaints Commission was looking into a claim that a senior NI figure was given a report from inside the Metropolitan Police on the progress of the original police investigation. The day before, court documents emerged showing the systematic deletion of emails relating to phone hacking.

The Leveson inquiry will this week begin to examine police-press relations, hearing evidence from the former deputy prime minister John Prescott, former deputy assistant Met commissioner Brian Paddick, former assistant commissioner John Yates, Andy Hayman – who led the original inquiry – former Metropolitan Police commissioners Sir Ian Blair and Sir Paul Stephenson and others.

They are expected to reopen old wounds and make a series of startling new allegations relating to widespread bribery of officials for stories. "It is jaw-dropping stuff," said one legal source familiar with the evidence. "We will see the most sensational developments yet." A second source claimed the allegations and counterallegations would result in a "bloodbath".

Revelations will include allegations that a web existed of corrupt public officials who received money from national newspapers, along with details of journalists who, over a period, have paid officials – in one case well into six figures – for stories.

Such allegations are certain to stoke fury at the failure of the original police inquiry in 2005/06 to unearth the full extent of unlawful behaviour. After the home of Glenn Mulcaire was raided, police collected several bin bags of evidence which revealed he had been repeatedly commissioned by many reporters. Despite this, NI persisted in its claims it was the work of just one "rogue reporter".

This failure to broaden the inquiry has given rise to accusations of an unhealthily close relationship between the police and NI. Two of those who have faced questions over the relationship with NI are John Yates and Andy Hayman. Mr Yates, who resigned last summer over the affair, is believed to be anxious to clear his name in the face of expected attempts to pin the blame on him. He has admitted shortcomings in the police investigation, but vehemently denies any personal impropriety, saying that the Director of Public Prosecutions set the bar impracticably high for securing a conviction for phone hacking, that counsel's advice gave him no reason to believe there was widespread wrongdoing and that terrorism had a more pressing claim on police resources.

Last year, friends revealed he was "incandescent" at the cursory nature of the search carried out by some of his colleagues which, friends said, resulted in him making inaccurate public statements.

It is believed that Mr Hayman, who led the original inquiry and went on to write a column for NI, will be scrutinised over the circumstances of his departure from the Met. His expenses have been the subject of much speculation, as have allegations of an affair. He, too, has vehemently denied wrongdoing.

Sources at the Met have privately expressed fury at the failure of NI to collaborate fully with the investigation, or to unearth anything in its own inquiries. "They pretended they were co-operating and they weren't," said one source. By seemingly helping the police, NI made it difficult for the police to ask a judge for a warrant for a more exhaustive search. Other serving officers in the Met have pointed fingers privately at the performance of the Crown Prosecution Service.

Yesterday, it was alleged that there were American phone numbers on the files of Glenn Mulcaire, which would be a significant development in terms of News Corps' attempt to move on from the scandal. Bloomberg website said that the numbers of the singer Charlotte Church's Los Angeles agent and New York publicist were found in Mulcaire's files. According to the report, the evidence is in the hands of the police in London.

Opponents of the Murdoch organisation have said that if evidence emerged of phone hacking in the US, the damage to News Corps would dwarf the UK-based damage. Insiders at the Leveson inquiry are also expecting more evidence to emerge about how much Mulcaire was paid and who exactly commissioned him, while previously unknown phone-hacking targets are expected to be identified.

The inquiry will hear from a number of victims of phone hacking, including the former deputy PM John Prescott and Lib-Dem deputy leader Simon Hughes. They are expected to relate how detectives mishandled their cases. Mr Prescott will reiterate his anger at the Metropolitan Police's failure to inform him his name and phone details had been found in Mulcaire's files. The police knew in 2006, for example, there was evidence that Tessa Jowell had had her phone hacked, yet she was not informed until years later.

"Leveson knows the victims were kept in the dark for far too long: he is absolutely determined to make sure they aren't kept in the dark a moment longer," one source told The Independent on Sunday last night.

The week ahead: Names due to appear before the inquiry

Monday Sue Akers, the Deputy Assistant Commissioner of the Metropolitan Police Service (MPS) who is leading the inquiry into phone and email hacking and claims of bribery of public officials.

Brian Paddick, former deputy assistant commissioner, MPS, who claims his voicemail was hacked.

Lord Prescott, the former Labour Party deputy leader who also claimed his voicemail was hacked.

Tuesday Nick Davies, The Guardian journalist. Jacqui Hames, former MPS officer, and Crimewatch presenter.

MP Simon Hughes.

Chris Jeffries, the Bristol landlord, who falsely implicated in the murder of Jo Yeates.

Jane Winter, director of British Irish Rights Watch (to be confirmed)

Magnus Boyd, solicitor (to be read)

Wednesday Detective Inspector (MPS) Mark Maberley

Detective Chief Superintendent (MPS) Keith Surtees

Detective Sergeant Phillip Williams

Thursday Peter Clarke, former deputy assistant commissioner with specialist operations, MPS

Andy Hayman, former assistant commissioner, MPS

Sir Paul Stephenson, former Metropolitan Police Commissioner