BSkyB has its summer party tonight at the Foreign & Commonwealth Office, a venue which its critics might wryly remark provides further evidence of Rupert Murdoch's close ties to the government. Jeremy Hunt's decision to approve News Corp's deal to buy the satellite broadcaster, with some extra conditions attached, will consolidate the media mogul's power in the UK at a time when one part of his empire is the subject of a police investigation. Those extra undertakings are largely meaningless – a director with journalistic experience will sit in on board meetings at the new, independently run, Sky News when editorial decisions are made, for example. Provisions to protect editorial independence were also put in place when Murdoch bought the Times in 1981 and the Wall Street Journal in 2007 and they were ignored.

Critics will claim this is a textbook example of how Murdoch wields the power vested in his newspapers. The Sun came out early and enthusiastically for David Cameron. Now the government has allowed him to take full control of a broadcaster whose revenues exceed those of the BBC. Team Cameron and Team Murdoch are undeniably close. The prime minister employed Andy Coulson, who was editor of the News of the World when its journalists were hacking into messages left on mobile phones, as his director of communications. Coulson resigned only when the full extent of phone hacking began to become apparent, and even then Cameron was reluctant to let him go.

Murdoch was the first visitor to No 10 after Cameron was elected, arriving through the back door so the photographers couldn't capture him coming in through the front. Rebekah Brooks, the former News of the World and Sun editor who now runs Murdoch's UK newspaper arm, dines regularly with the Camerons in Oxfordshire, where Brooks and her husband Charlie have a weekend retreat and the PM has a constituency home.Rupert's son James, who is chairman of BSkyB and a senior executive at News Crop (and Brooks' boss), was at one such social event last Christmas. The Tories and the Murdochs have been driven closer by political and commercial expediency, as well as ideological conviction, and those ties are further cemented at social occasions. The same was true in the Blair era, while Gordon Brown was among the guests at Brooks's wedding.

Meanwhile, Labour backbenchers made much of the phone-hacking link when the culture secretary was dragged to the Commons at 11.30am to answer an urgent question on the takeover tabled by former defence minister Tom Watson MP. Along with Chris Bryant, the Labour MP and hacking victim who is suing the News of the World, Watson has done more to highlight wrongdoing at the News of the World than anyone else. "This seedy bid would shame a banana republic" Watson said this morning.

Many opposition MPs, along with a few Liberal Democrats, may continue to ask how a company which has now admitted criminality on a significant scale can be allowed to increase its power. The Lib Dems are in a tortuous position, although that is a stance they have become familiar with during their times as the Tories coalition partners. It was clear that business secretary Vince Cable wanted to use his powers to block the Sky takeover, if possible, or reduce its power after it was absorbed into News Corp – as he foolishly boasted to two Telegraph journalists posing as constituents. By doing so, he set in motion a chain of events which ended with his power to intervene in media mergers being removed.Now the Lib Dems can complain all they like about Murdoch's power, doubtless with the memory of the kicking his papers gave to Nick Clegg when it seemed he might lead his party to a record election performance still fresh in their minds. But they are unable to do much about it, particularly as the Murdoch press is currently going easy on the Lib Dems because, as part of the coalition, they are vital to Cameron's survival.

Labour's position is slightly more nuanced. The shadow culture secretary, Ivan Lewis, raised hacking in the house this morning when he quizzed Hunt about the deal, but Speaker John Bercow intervened and told him that was off limits, which allowed Hunt to sidestep the question.

Nevertheless, that was a departure for Labour. Until now, Lewis has consistently attacked Hunt for refusing to refer the deal to the Competition Commission for a full enquiry, and thus subjecting it to further regulatory scrutiny, but refused to take the gloves off by raising the phone-hacking affair. Lewis's attack was spiced somewhat by his assertion that hacking went far further than the News of the World, and his call for a public inquiry into press conduct generally. Ed Miliband's director of communications, Tom Baldwin, made it clear in a leaked memo to MPs that hacking and News Corp's bid for Sky should be treated as separate issues, and if you believe that all parties need to court Murdoch's paper's in order to ensure their message is heard, then that was a shrewd political calculation. Decoupling the Sky bid from the hacking affair was privately welcomed by Brooks. It may even have spiked News International's guns, and possibly given the Labour leadership a slightly easier ride in the Sun that it would otherwise have got. The tabloid paper ran a surprisingly upbeat profile of the Labour leader in April, although, tellingly perhaps, it was published on Good Friday, when newspapers sales are low.

The conviction that the Murdoch press must be neutralised, at least, and cultivated if possible runs deep in some parts of the Labour party, who still believe the unremittingly hostile treatment Neil Kinnock received made winning elections more difficult. Rupert Murdoch's power may be exaggerated, particularly in an age when newspapers sales are falling, but whether it is illusory on not, all that matters is that politicians continue to believe it is real.

Some on the left long for the Labour party to take a principled stand against a man whose dominance of the UK media will be further enhanced once the Sky deal is done and his market-leading newspapers become part of the same company which owns the nation's richest broadcaster. They are sure to find ways of working more closely together, thus further weakening competitors, including the Guardian, which challenge the inherent rightwing bias of the British press.

Lewis's comments this morning aside, the Labour party is effectively treading a middle course, landing blows on the government by criticising Hunt's decision to clear the Sky takeover, but resolutely refusing to be drawn into a war with the Murdoch empire. That risks alienating those who would like to see Murdoch's power checked, but the bigger question is, what does Labour gain as a result? Sitting on the fence may result in slightly less hostile coverage, but it is unlikely ever to persuade the Sun, the News of the World, the Times or the Sunday Times to abandon their support for Cameron.

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