Britain's parliament, police, the press and one of the prime minister's most trusted advisers are all implicated in an alleged phone hacking scandal.

Opposition Labour MPs have demanded police reopen the investigation into alleged phone hacking by reporters of the tabloid News of the World newspaper.

The Conservative-led coalition government has been pressed on allegations its director of communications, Andy Coulson, knew phone-hacking was going on at the newspaper when he was its editor from 2003 to 2007.

The News of the World is notorious for its high-profile stings, including its recent expose of alleged spot-fixing by members of the Pakistan cricket team.

In 2007 its royal editor, Clive Goodman, and a private investigator, Glenn Mulcaire, were jailed for hacking into royal household voicemails.

The editor at the time, Mr Coulson, now prime minister David Cameron's communications director, said he neither approved of the hacking, nor knew it was taking place.

But former journalist Sean Hoare tells a very different story.

"I've stood by Andy and been requested to tap phones, OK, or hack into them and so on," he said.

"He was well aware that the practice exists. To deny it is a lie, it's simply a lie."

In the House of Commons overnight, MP after MP called on home secretary Theresa May to investigate Mr Coulson and Scotland Yard's handling of the case.

"The integrity of our democracy is under scrutiny around the world. The home secretary must not join the conspiracy to make it a laughing stock," Labour MP Tom Watson told the house.

Shadow home secretary Alan Johnson says Scotland Yard showed no enthusiasm to widen its investigation beyond Mr Mulcaire and Mr Goodman.

"To start exposing widespread tawdry practices in that newsroom was a heavy stone that they didn't want to try and lift," he said.

But during the robust half-hour, Theresa May's response remained the same.

"Operational matters such as this, whether to investigate particular individuals, are a matter for the police," she said.

She said that any move by a home secretary to tell the police who they should or should not investigate would represent "a very slippery slope down which neither I nor this government intend to go."

Scotland Yard has been accused of a lack of zeal, be it through laziness, or because of cosy relationships with journalists at News of the World.

Labour MP Chris Bryant, says his phone was hacked, as were those of other MPs.

"I told the police this, months ago. They've done absolutely nothing about it and I say in all seriousness to the home secretary, there may well be dozens of members, whose phones have been intercepted," he said.

The Metropolitan Police says it will investigate the new material.

But the former editor of The Sun newspaper, Kelvin McKenzie, says the story is a fabrication.

"The evidence comes from a man who actually has a drink and drugs issue, even by his own admission," he said.