A man cleared of murder can be named as a private investigator with links to corrupt police officers who earned £150,000 a year from the News of the World for supplying illegally obtained information on people in the public eye.

Jonathan Rees was acquitted of the murder of his former business partner, Daniel Morgan, who was found in a south London car park in 1987 with an axe in the back of his head. The case collapsed after 18 months of legal argument, during which it has been impossible for media to write about Rees's Fleet Street connections.

The ending of the trial means it is now possible for the first time to tell how Rees went to prison in December 2000 after a period of earning six-figure sums from the News of the World.

Rees, who had worked for the paper for seven years, was jailed for planting cocaine on a woman in order to discredit her during divorce proceedings. After his release from prison Rees, who had been bugged for six months by Scotland Yard because of his links with corrupt police officers, was rehired by the News of the World, which was being edited by Andy Coulson.

The revelations call into question David Cameron's judgment in choosing Coulson as director of communications at 10 Downing Street in May 2010. Both he and the deputy prime minister had been warned in March 2010 about Coulson's responsibility for rehiring Rees after his prison sentence.

Nick Clegg had been informed in detail about Jonathan Rees's murder charge, his prison sentence and his involvement with police corruption – and that he and three other private investigators had committed crimes for the News of the World while Coulson was deputy editor or editor.

In September 2002 the Guardian published a lengthy exposé of Rees's involvement with police corruption and illegal newsgathering. But since April 2008 the press have been prevented from revealing Rees's connections with the News of the World, or placing it in the context of News International's denials about any knowledge of illegal activity on behalf of the company.

News International had until recently claimed there was just one "rotten apple" at the company and that the paper had no knowledge of the illegal activities of another private investigator, Glenn Mulcaire, who was paid £100,000 before being sent to jail in 2007.

Rebekah Wade, now chief executive of News International, was deputy editor of the News of the World from 1998-2000 and editor from 2000 to 2003. Coulson was deputy editor of the News of the World from 2000 and editor from 2003 to 2007. Rees worked for the paper until 2000, when he was jailed for seven years, and then again after his release from prison in 2005.

Rees, now aged 56, worked regularly for the Daily Mirror and the Sunday Mirror as well as for the News of the World. His numerous targets included members of the royal family whose bank accounts he penetrated; political figures including Peter Mandelson and Alastair Campbell; rock stars such as Eric Clapton, Mick Jagger and George Michael; the Olympic athlete Linford Christie and former England footballer Gary Lineker; TV presenters Richard Madeley and Judy Finnigan; and people associated with tabloid story topics, including the daughter of the former miners leader Arthur Scargill and the family of the Yorkshire Ripper, Peter Sutcliffe.

Jonathan Rees paid a network of corrupt police officers who sold him confidential records. He boasted of other corrupt contacts in banks and government organisations; hired specialists to "blag" confidential data from targets' current accounts, phone records and car registration; allegedly used "Trojan horse" emails to extract information from computers; and – according to two sources – commissioned burglaries to obtain material for journalists.

On Friday the crown said it could offer no evidence against Rees and two other men accused of Morgan's murder. An Old Bailey judge ordered the acquittal of Rees and his co-defendants.

The prosecutor, Nicholas Hilliard QC, said the weight of paperwork – about 750,000 pages going back over 24 years – made it impossible to guarantee that defence lawyers would be able to see everything they may need for the trial to be fair.

Morgan's family has called for an inquiry into the case. Scotland Yard admitted that corruption in the first murder investigation had shielded the killers of Rees's one-time business partner.

The Rees case raises new questions about the failure of Scotland Yard's 2006 inquiry into phone hacking at the News of the World. For more than a decade Scotland Yard has been holding detailed evidence of Rees's corrupt activities for the News of the World and other titles, including many hours of taped conversations from a listening device that was planted in Rees's office for six months from April 1999. Despite this the Met in 2006 accepted the News of the World's claim that its royal correspondent, Clive Goodman, who had been caught hacking voicemail, was a "rogue reporter". Detectives decided not to interview any other journalist or executive from the paper. They also decided not to seek a court order to force the paper to disclose internal paperwork.

In February 2010 the Guardian wrote to Coulson asking him to comment on his responsibility for hiring Rees. The Guardian's letter also asked about three other private investigators who were convicted of crimes committed on behalf of the News of the World. Steve Whittamore and John Boyall admitted buying confidential data from the police national computer, and Glenn Mulcaire was convicted of hacking voicemail messages. Coulson has always maintained he knew nothing of any of this activity.

He was also asked to comment on the fact that Scotland Yard was believed to have arrested and questioned Coulson's former assistant editor, Greg Miskiw, in 2005 and questioned him about the alleged payment of bribes to serving police officers and the employees of mobile phone companies. Miskiw declined to respond to Guardian questions about this.

Along with Rees, Glenn and Garry Vian were also acquitted yesterday in the Daniel Morgan murder case.

The police case involved a series of supergrasses and the crown dropped some of them during some of the longest legal argument ever seen in an English criminal court.

After his acquittal Rees said: "I want a judicial inquiry, ideally a public inquiry."

In a statement read on his behalf, Rees's solicitor said: "When Daniel Morgan was killed it was an awful shock to me and to our business.

Whatever anyone may say on 10th March 1987 I lost a friend and business partner."