David Cameron's former communications chief Andy Coulson is facing jail after being found guilty of conspiring to hack phones while he was editor of the News of the World.

Rebekah Brooks, his predecessor in the job, walked free from the Old Bailey after she was cleared of all four of the charges she faced in the eight-month trial.

There were dramatic scenes outside the court as Brooks and her racehorse trainer husband Charlie, who was also cleared, left the dock.

Coulson stood emotionless as he absorbed the news. Looking faint and close to tears, Brooks walked with the support of the court's matron and her solicitor Angus McBride. Charlie, also close to tears, followed, as did her secretary, Cheryl Carter, who was also cleared.

Brooks smiled as the jury forewoman called out the first of the verdicts on the four charges she faced. She smiled weakly as the first verdict of not guilty was called out, knowing she had three more to come.

Charlie, Carter and News International's head of security, Mark Hanna, were all cleared of one count each – conspiracy to pervert the course of justice.

The Brookses made no comment on the verdicts and left the Old Bailey to be confronted by a phalanx of photographers, TV crews and members of the public as she was shepherded to an awaiting taxi. Asked if she had a comment to make, Brooks' solicitor Angus McBride said she couldn't say anything because the trial was ongoing with several verdicts still to be reached.

The News of the World's former managing editor Stuart Kuttner was also found not guilty on phone-hacking charges, but the jury have not reached unanimous verdicts on two further charges faced by Coulson and two charges faced by the News of the World's former royal editor Clive Goodman.

The judge instructed them to deliberate further and gave them a majority direction, which means they can return with a verdict that is not unanimous.

Coulson's verdict raised immediate questions for Cameron, who hired him as director of communications only a few weeks after he quit the News of the World.

In a brief statement to camera, the prime minister offered a "full and frank apology" for employing Andy Coulson at 10 Downing Street, saying: "It was the wrong decision and I am very clear about that."

He said he had given Coulson a second chance after he left the News of the World but conceded this was the wrong decision.

Cameron said he had asked Coulson about whether he knew about phone hacking, and he said he did not. "Knowing what I now know, those assurances were not right," Cameron said. "It was obviously wrong of me to employ him. I gave someone a second chance. It turned out to be a bad decision."

Coulson has spent the last seven years denying he knew about hacking and shocked everyone bar his defence team in court when he revealed for the first time he had listened to the voicemail of former home secretary David Blunkett in 2004, three years before he was hired by Cameron.

He went into the trial last year pleading not guilty to committing a crime by conspiring to hack phones and consistently denied that he had any knowledge the practice was widespread at the tabloid since he had resigned from the News of the World in January 2007. At that time he had stepped down because he took "ultimate responsibility" when one a reporter, royal editor Clive Goodman, had pleaded guilty to phone hacking.

His admission that he knew one of his reporters had hacked into the home secretary's messages at a time when Britain was at war in Iraq and he did not sack or discipline him, raises questions about the security vetting he was subjected to before he was given clearance to work at No 10 in 2010.

Coulson has told the Leveson inquiry that he may have had "unsupervised access" to material designated top secret or above and attended meetings of the national security council.

At the Leveson inquiry in June 2012, Cameron said that when the Guardian first reported in 2009 that phone hacking at the News of the World may have gone farther than a single rogue reporter, the PM said Coulson had repeated an assurance made on taking the job with the Conservatives that he had known nothing about it.

Under oath, Cameron replied: "I was reliant on his word but I was also reliant on the fact that the Press Complaints Commission had accepted his word, the select committee had accepted his word, the police had accepted his word, the Crown Prosecution Service had accepted his word." But at that point in 2009, Coulson had not been interviewed by the police, CPS or a select committee on the subject: and the PCC never interviewed Coulson personally.

Ed Miliband said Cameron owed the country not just an apology but an explanation. He said "This isn't just a serious error of judgment, this taints Cameron's government There was information out there. He was warned".

In a sign of the political battle ahead, Labour's shadow chancellor, Ed Balls, accused Cameron and the chancellor, George Osborne, of a grave error of judgement in appointing Coulson as director of communications at the Conservative party and then again in 2010 appointing him to head the No 10 press operations.

Osborne had conducted the initial interview with Coulson in 2007, and made the recommendation that Cameron appoint him to run his press operation in opposition in 2008. In the House of Commons, Balls pressed ahead with an attack on Osborne during Treasury questions: "The jury has just delivered its verdict and the government's former director of communications has been found guilty of a conspiracy to hack phones," Balls said. "Does the chancellor now accept that it was a terrible error of judgement [to appoint Coulson]?".

Bercow interrupted to say the matter did not relate to the chancellor's responsibilities, but Balls was nevertheless allowed to go further. He continued: "Does the chancellor accept he has brought into disrepute the office of the chancellor and the Treasury by urging the prime minister for his own reasons to ring Coulson into government and has he not damaged his own reputation, and that of the government."

Osborne replied that the verdicts had been announced in the court, and that he intended to go and study them. "And if a statement is appropriate from me and the prime minister there will be one, not in Treasury questions where we are talking about the economy.

The chancellor added: "Can I say the person who worked alongside Damian McBride is no person to give lectures on anything." McBride resigned as Gordon Brown's press spokesman after it was shown he was involved in trying to set up a new website that would have used smears against Conservative supporters.

Labour will have to judge how it responds to the trial and the verdicts. The party feels it is legitimate to press the issue of Cameron's personal judgement, but is also aware that if ii oversteps the mark, it will look to be making political capital. Downing Street senses that Cameron's misjudgement has been factored into the share price.

One of the victims of phone hacking, the former Labour home secretary David Blunkett, said the issue was not about vindictiveness or vengeance. "It is about criminality, it is about obtaining justice, and I hope that has been obtained," he said.

Blunkett told the Guardian it was little understood how hacking leads to a breakdown in trust within a circle, as its members cannot be sure how private information came into the public domain.

Brooks's acquittal will provide some relief for Rupert Murdoch, who once described the woman who rose to be chief executive of his London based News International operation his "top priority" when the phone hacking crisis first broke in the summer of 2011.

Tuesday's verdict is the end of a three-year drama for Brooks, who joined the News of the World as a researcher in 1989 and climbed her way to the top over 22 years, becoming one of Rupert Murdoch's closest aides along the way.

Brooks was found not guilty of four charges including conspiring to hack phones when she was editor of the News of the World and making corrupt payments to public officials when she was editor of the Sun. She was also cleared of two charges that she conspired with her former secretary and her husband to conceal evidence from police investigating phone hacking in 2011.

Coulson's conviction brings the number of former News of the World journalists facing jail over phone-hacking to five. efore the trial three former newsdesk executives, including Greg Miskiw and James Weatherup, pleaded guilty, as did the phone-hacker Glenn Mulcaire and a former reporter, Dan Evans, who confessed to hacking Sienna Miller's messages on Daniel Craig's phone.

Neville Thurlbeck, the News of the World's former chief reporter and news editor, pleaded guilty after the police found the tapes he had of Blunkett's messages in a News International safe. Sentencing is expected a few days after the trial is finished.

• This article was amended on Wednesday 25 June 2014. In it we said the jury had not reached unanimous verdicts on two further charges faced by Coulson and one charge faced by the News of the World's former royal editor Clive Goodman. In fact, it was two charges each. This has been corrected.