Image copyright PA Image caption Mr Coulson resigned from News International in January 2007

Andy Coulson, the former editor of the News of the World, received several hundred thousand pounds from News International after starting work as the Conservative Party's Director of Communications in July 2007.

Mr Coulson has been arrested on suspicion of involvement in phone hacking and bribing the police. The payments were part of his severance package, under what is known as a "compromise agreement".

According to sources, Mr Coulson's contractual leaving pay was given to him in instalments until the end of 2007 - which means he continued to be financially linked to News International for several months of his tenure as David Cameron's main media adviser.

The disclosure that Mr Coulson maintained a financial relationship with News International after moving into a sensitive role in the Tory Party will be controversial.

According to a senior member of the government, Tory Party managers at the time say they were not aware Mr Coulson was receiving these payments from News International while employed by the Conservative Party.

As I understand it, after Mr Coulson resigned from News International on 26 January 2007, News International said it would pay him his full entitlement under his two-year contract as editor of the News of the World - although the money would be paid in instalments.

I am told that Mr Coulson also continued to receive his News International work benefits, such as healthcare, for three years, and he kept his company car.

Mr Coulson was appointed as the Conservative Party's Director of Communications on 31 May 2007 and took up the post in July of that year. He was reportedly paid £275,000 a year by the Conservative Party.

News International is the UK arm of Rupert Murdoch's News Corporation. For decades, leaders of the Tory and Labour parties have battled to win the support of Mr Murdoch's influential newspapers, including the Sun and the Times.

The Tories and Labour have both had to respond to criticisms that they became unhealthily close to Mr Murdoch and his senior executives, including Mr Coulson's predecessor as editor of the News of the World, Rebekah Brooks, who went on to become chief executive of News International - and who has also been arrested on suspicion of involvement in phone hacking and making illegal payments to police officers.

Some will question whether Mr Coulson could give impartial advice on media issues to Mr Cameron when in opposition, given that he retained financial ties to News International.

Mr Coulson's supporters would dispute that his impartiality had been compromised.

When the newspaper's then royal editor, Clive Goodman, was convicted of phone hacking in January 2007 and was imprisoned, Mr Coulson resigned from News International.

Mr Coulson denied any knowledge of the phone hacking but said he felt obliged to quit because the hacking had taken place while he was editor of the News of the World.

A letter written by Mr Goodman in March 2007, disclosed last week by the Culture Media and Sport Committee, claims that phone hacking was routinely discussed in the News of the World's editorial conference, although it does not explicitly say that Mr Coulson knew about hacking.

In May 2010, after the Tories formed a coalition government with the Liberal Democrats, Mr Coulson became Director of Communications for the government. In January of this year, he resigned from that post, following disclosures that criminal activity at the News of the World may have been more widespread than News International had been saying.

Mr Coulson was arrested in July.

David Cameron has had to defend his recruitment of Mr Coulson, following claims he ignored warnings that phone hacking went wider than Mr Coulson had claimed.

A spokesman for News International said: "News International consistently does not comment on the financial arrangements of any individual."

Mr Coulson did not return calls.

Update, 09:18, 23 August 2011: Here are a few additional questions raised by my post last night on the terms of Mr Coulson's departure package from the News of the World.

1) Why weren't Mr Coulson's payments from News International "mitigated" to use the jargon, or reduced by News International after he started drawing salary from the Conservative Party? Mitigation in these circumstances is not unusual, although it does not by any means always take place. Mr Coulson was reportedly being paid £275,000 a year by the Tories.

2) As the recipient of work benefits including private healthcare from News International for three years after leaving, what were these benefits worth - and what kind of administrative links did Mr Coulson maintain with News International when receiving them?

3) Given that Mr Coulson resigned as editor of the News of the World because he felt he should take personal responsibility for the damage to the now-closed Sunday tabloid caused by Clive Goodman's imprisonment for phone hacking (though Mr Coulson said he had no knowledge the hacking was taking place), why did News International give him what sources describe to me as the most generous severance package he could have received?

4) Did Mr Coulson receive any commitment from News International that it should pay his legal costs, should the need arise? Is News International providing him with financial help with his legal expenses following his arrest in July on suspicion of involvement in phone hacking and bribing the police (various News International sources were reluctant to talk about this when I put it to them)?

5) An influential government member told me last night that senior Conservative party managers at the time did not know Mr Coulson continued to receive hundreds of thousands of pounds from News International while in the employ of the Conservative Party (the payments stopped at the end of 2007). But did the Conservative Party or David Cameron, as the party's leader, ask Mr Coulson whether he had any continuing financial links with News International when it hired him as Director of Communications in May 2007 (he started the job in July 2007)?