Leveson inquiry hears Met police allegedly sent report to John Reid and security service, but it was not made public • This story was updated at 6.20pm to include comments from John Reid, David Blunkett and Tessa Jowell

The Tony Blair government was secretly briefed about the phone hacking scandal, according to the head of the aborted 2006 police investigation into the News of the World.

Peter Clarke, the Metropolitan police's former deputy assistant commissioner, made the unexpected claim to the Leveson inquiry this week. The hearing heard details of how the targeting of Labour cabinet ministers was subsequently kept quiet.

Clarke told Lord Justice Leveson that a confidential report on the phone hacking discoveries was sent by the Met to the then home secretary, John Reid, who personally discussed it with him. Clarke indicated that Reid was told about the targeting of deputy prime minister John Prescott. A briefing was also sent to the cabinet office at No 10, and to MI5.

After hearing Clarke's disclosure on Thursday, Leveson immediately demanded that the Reid report be handed over to his inquiry.

But Reid himself denied receiving such a report. He said on Friday evening: "I can categorically say that I did not receive any briefing from the Met suggesting that there was widespread hacking including MPs and the deputy PM."

Clarke told the inquiry on oath: "I am absolutely clear in my mind that HM government was fully aware of this case at the time .... I recall discussing the case with Dr John Reid, the then home secretary, shortly after Goodman and Mulcaire had been arrested. This was in the margins of a meeting about broader counter terrorism issues ... the Home Office had been informed of the arrests and the broad nature of the case that was alleged against Goodman and Mulcaire."

He was asked: "Did you make is clear to him that although the investigation had clearly and conclusively implicated Goodman and Mulcaire, (a) the range of victims was far wider than the royal household, and (b) that other journalists might well have been involved?"

He answered: "I think it did. I don't remember the exact content of that discussion. I know that a briefing paper went from the Metropolitan police to the Home Office and that Dr Reid was aware of it and it was on the basis of that that he asked me some questions."

Asked about police failure to brief John Prescott that he was a hacking target, Clarke testified: "It wouldn't be for me to go direct to Lord Prescott. I discussed this with the then home secretary, Dr Reid. He was aware of the investigation."

The police claim to Leveson raised the possibility for the first time that the Blair government colluded in a cover-up. At the time, according to former ministers, the Labour administration was anxious to keep on good terms with the Murdoch papers.

At least three cabinet ministers in the then Blair government were among the 44 MPs and 10 peers now thought to be the News of the World's hacking targets, with national security implications. But these facts were withheld from the public during the trial of former News of the World royal editor Clive Goodman and Glenn Mulcaire, the private investigator who formerly worked for the paper, and full details have only emerged during this week's Leveson hearings into the behaviour of the police.

The then serving culture and media minister, Tessa Jowell, and former home secretary David Blunkett, as well as the then deputy prime minister John Prescott, were discovered at an early stage by police to be hacking targets. But none were named in the subsequent prosecution of the News of the World's allegedly single "rogue reporter", Goodman, and Mulcaire.

Prescott was never informed by anyone of the News of the World's behaviour towards him, although police were aware of it almost from the day they raided Mulcaire's home and found on the premises incriminating documents about the deputy prime minister and his assistant.

Blunkett, too, says he was never told he had been a target, via a friend for whom he left messages. The then police commissioner, Ian Blair, phoned him in Italy to tell him of the arrests, Blunkett says. But, according to the former home secretary, the commissioner said only that Blunkett personally had not been hacked ... Blunkett's office said: "He naturally assumed this was a courtesy call. Everyone is, of course, wiser now with hindsight."

Jowell was privately told by police at an early stage that her phone had been hacked, after they made the discovery on 26 July 2006, before any arrests had occurred, according to police testimony to Leveson.

Police further claimed to Leveson that Jowell refused to co-operate with police's request to sign a statement which could be used for the prosecution, and the facts about her were subsequently not revealed.

DCS Keith Surtees said: "I contacted several potential victims to inform them that their phones had been illegally intercepted and to request that they provide statements and assist any future trial. One of these victims was Tessa Jowell. All of the potential victims declined to assist us with the prosecution."

Jowell today denied that she had failed to co-operate. A statement issued by her lawyer said: "Tessa Jowell has a clear recollection of the conversation and is sure that she was not asked to provide a statement. She has confirmed that she was simply told about the hacking, given some security advice and told there was nothing else she needed to do. She said: "If I had been asked, I would have considered myself under an obligation to provide a statement as I have now done to Operation Weeting."

All three ministers had cause for personal embarrassment. Jowell's husband, David Mills, was the subject of controversy over claims relating to offshore companies he had helped Italian premier Silvio Berlusconi set up. Blunkett had been involved in an affair with Spectator publisher Kimberly Fortier which ended acrimoniously.

Prescott, as he described to the inquiry this week, had been targeted by the newspaper because of an affair with his then aide, Tracey Temple.

The Blair government and its spin doctor Alastair Campbell had a policy of cultivating close links with the Murdoch papers, including the News of the World, which had supported the party at past general elections. According to Prescott and others, they were unwilling to challenge the behaviour of the Murdoch press.

Clarke admitted on Thursday that Prescott should have been informed that he and his adviser had been targeted. He said he had no idea why no one had done this. He would have expected the senior investigating officer – who was DCS Philip Williams – to have contacted Prescott's office, he said.

Police failed to turn over to the Leveson inquiry the secret report they said they had sent to the home office. Leveson asked for it. Robert Jay, counsel to the inquiry, said there might be public interest immunity claims over part of it.

The then commissioner phoned Blunkett who was in Italy, to tell him of the News of the World arrests.. But according to Blunkett, he never told him that the former secretary had himself been a target, because his voicemail messages to a friend, Sally Anderson, were being intercepted.

Blunkett told the Guardian: "I was told explicitly in August 2006 that I had not personally been hacked. This followed the arrest of Glenn Mulcaire and of course there had not been time for any thorough review to take place.

I also want to make it absolutely clear that I knew nothing about the alleged report to John Reid when he was home secretary at that time.

"I also want to make it clear that when I was eventually informed by the police of the activities around myself and my family, I co-operated fully and have done ever since."

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