This live blog will now continue here. Click on this link to view continuing coverage of the closure of the News of the World.

Kirsty Scott sends more from Tom Watson MP, who has campaigned against phone-hacking at the paper:

Rupert Murdoch did not close the News of the World. It is the revulsion of families up and down the land as to what they got up to. It was going to lose all its readers and it had no advertisers left. They had no choice.

Watson was speaking in Glasgow where he had travelled to help Aamer Anwar, the solicitor of Tommy Sheridan, call for an investigation into evidence given by News of the World's executives at Sheridan's perjury trial.

The James Murdoch statement is hard-hitting. If the allegations are true, Murdoch says, behaviour at the paper was "inhuman". The News of the World at News International "failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose". The fact that a good newsroom had turned "bad" was "not fully understood or adequately pursued ... As a result the News of the World and News International wrongly maintained that these issues were confined to one reporter." In addition, "the paper made statements to parliament without being in the full possession of the facts. This was wrong."

The company paid out-of-court settlements approved by me. "I now know that I did not have a complete picture when I did so. This was wrong and is a matter of serious regret."

Sunday's issue will be the last ever. All revenue from the paper will go to "good causes". There will be no commercial adverts, with all advertising space going to good causes too.

He acknowledged that staff, particularly those who were not employed at the time of the hacking, "may see these changes as a price loyal staff at the News of the World are paying for the transgressions of others". He called their work "a credit to journalism".

On the police payments case, a source says the evidence the police currently have relates to three junior officers taking cash from the News of the World.

• News of the World axed by News International

• Full statement from News International

Here's the full statement as put out by News International.

Here's the full statement from James Murdoch:

News International today announces that this Sunday, 10 July 2011, will be the last issue of the News of the World. Making the announcement to staff, James Murdoch, Deputy Chief Operating Officer, News Corporation, and Chairman, News International said: "I have important things to say about the News of the World and the steps we are taking to address the very serious problems that have occurred. It is only right that you as colleagues at News International are first to hear what I have to say and that you hear it directly from me. So thank you very much for coming here and listening. You do not need to be told that The News of the World is 168 years old. That it is read by more people than any other English language newspaper. That it has enjoyed support from Britain's largest advertisers. And that it has a proud history of fighting crime, exposing wrong-doing and regularly setting the news agenda for the nation. When I tell people why I am proud to be part of News Corporation, I say that our commitment to journalism and a free press is one of the things that sets us apart. Your work is a credit to this. The good things the News of the World does, however, have been sullied by behaviour that was wrong. Indeed, if recent allegations are true, it was inhuman and has no place in our Company. The News of the World is in the business of holding others to account. But it failed when it came to itself. In 2006, the police focused their investigations on two men. Both went to jail. But the News of the World and News International failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose. Wrongdoers turned a good newsroom bad and this was not fully understood or adequately pursued. As a result, the News of the World and News International wrongly maintained that these issues were confined to one reporter. We now have voluntarily given evidence to the police that I believe will prove that this was untrue and those who acted wrongly will have to face the consequences. This was not the only fault. The paper made statements to Parliament without being in the full possession of the facts. This was wrong. The Company paid out-of-court settlements approved by me. I now know that I did not have a complete picture when I did so. This was wrong and is a matter of serious regret. Currently, there are two major and ongoing police investigations. We are cooperating fully and actively with both. You know that it was News International who voluntarily brought evidence that led to opening Operation Weeting and Operation Elveden. This full cooperation will continue until the Police's work is done. We have also admitted liability in civil cases. Already, we have settled a number of prominent cases and set up a Compensation Scheme, with cases to be adjudicated by former High Court judge Sir Charles Gray. Apologising and making amends is the right thing to do. Inside the Company, we set up a Management and Standards Committee that is working on these issues and that has hired Olswang to examine past failings and recommend systems and practices that over time should become standards for the industry. We have committed to publishing Olswang's terms of reference and eventual recommendations in a way that is open and transparent. We have welcomed broad public inquiries into press standards and police practices and will cooperate with them fully. So, just as I acknowledge we have made mistakes, I hope you and everyone inside and outside the Company will acknowledge that we are doing our utmost to fix them, atone for them, and make sure they never happen again. Having consulted senior colleagues, I have decided that we must take further decisive action with respect to the paper. This Sunday will be the last issue of the News of the World. Colin Myler will edit the final edition of the paper. In addition, I have decided that all of the News of the World's revenue this weekend will go to good causes. While we may never be able to make up for distress that has been caused, the right thing to do is for every penny of the circulation revenue we receive this weekend to go to organisations – many of whom are long-term friends and partners – that improve life in Britain and are devoted to treating others with dignity. We will run no commercial advertisements this weekend. Any advertising space in this last edition will be donated to causes and charities that wish to expose their good works to our millions of readers. These are strong measures. They are made humbly and out of respect. I am convinced they are the right thing to do. Many of you, if not the vast majority of you, are either new to the Company or have had no connection to the News of the World during the years when egregious behaviour occurred. I can understand how unfair these decisions may feel. Particularly, for colleagues who will leave the Company. Of course, we will communicate next steps in detail and begin appropriate consultations. You may see these changes as a price loyal staff at the News of the World are paying for the transgressions of others. So please hear me when I say that your good work is a credit to journalism. I do not want the legitimacy of what you do to be compromised by acts of others. I want all journalism at News International to be beyond reproach. I insist that this organisation lives up to the standard of behaviour we expect of others. And, finally, I want you all to know that it is critical that the integrity of every journalist who has played fairly is restored. Thank you for listening.

Tom Watson MP:

No one was going to buy this paper any more. No one was going to advertise in it. They destroyed this paper.

Just starting to get some of James Murdoch's statement:

Having consulted senior colleagues, I have decided that we must take further decisive action with respect to the paper. This Sunday will be the last issue of the News of the World.

Colin Myler will edit final edition and all the News of the World revenue will go to good causes, James Murdoch says in his statement.

James Murdoch is saying this Sunday's News of the World will be the final issue.

Sunday will be the last issue of the News of the World.

On the BSkyB deal, the prime minister's spokesman has just said: "It will take as long as it takes to look at the issues and take the decision."

Patrick Wintour, the Guardian's political editor, tells me the media inquiry will probably be able to start before the current phone-hacking investigations are over.

I just spoke to Tesco and they said they would not be expanding on their earlier statements confirming they would keep advertising with the News of the World, but if the NoW is dropping all advertising this Sunday that may get the supermarket chain off the hook.

The prime minister and Ed Miliband will meet next Wednesday to discuss the setting up of inquiries into the hacking scandal.

The terms of reference and other details will be up for discussion, but the PM's official spokesman would not be drawn on whether they would be finalised before parliament breaks for the summer.

"All these things are going to take as long as they take," he said.

News of the World will not be running any advertising this Sunday, reports claim.

Corrupt police officers face unprecedented jail terms if the extent of their alleged payment by the News of the World is proven, one of Britain's top lawyers has told the Press Association news agency.

Following claims that officers received up to £30,000 for information, Michael Mansfield QC said sentences would dwarf terms served by other officers convicted of similar offences.

This is turning into a terrible day for the News of the World. So many advertisers are pulling out that the situation is switching to one of naming and shaming those who are staying put – as campaigns like the Political Scrapbook one show. The comments under this Facebook statement by Tesco, which is holding on to its advertising, must be worrying for the supermarket chain – typical commenters suggest they will now shop elsewhere and advise Tesco they have created "a complete PR disaster".

Here's the latest from my colleague Dan Sabbagh, the Guardian's head of media, on the BSkyB bid.

Julia Finch, our business editor, says that Next, the high street and catalogue chain, has removed a link from its website to Fabulous, the News of the World magazine.

Next says it didn't have any advertising lined up for the NoW - it usually only advertises twice a year, in the run-up to Christmas. But that was enough to put it in the top 30 advertisers.

Next, incidentally, is run by Lord Simon Wolfson, who was elevated to the House of Lords last year. Wolfson is a significant donor to the Conservative Party, and supported David Cameron's leadership challenge.

According to comedy website Chortle, comedian Dave Gorman has quit his News of the World column.

Dan Wooton, the showbiz editor of the NoW, has put out this "personal statement on News of the World phone hacking":

I'm not going to lie. Having a column in the News of the World this week has not been easy. Like you, I feel sickened by the stories about the alleged hacking of Milly Dowler and others' voicemail accounts. It is disgusting. To be honest, I feel sick about the hacking of anyone. I would NEVER even think about doing that or believe it is acceptable in any way. What I have to stress to you is this: I do NOT work for the newspaper you are reading about. The vast majority of my colleagues, including journalists and management, were not working on this newspaper during those years. There is a new regime in place here. I have only ever worked under Colin Myler as editor. Here's what he said yesterday about this situation. Now, just remember, my job is to bring you guys the best showbiz stories in the business week in week out – the X Factor, Cheryl and Ashley, Kate Moss, TOWIE and all of that good stuff. I do so in a legal, ethical and moral way and will continue to do so. Thank you so much for the people who understand that and have let me know during this difficult week.

The second comment underneath Wooton's statement suggests readers have taken this in the spirit it was meant.

Yesterday TV presenter Martin Lewis explained why he would not quit the paper in similar terms to Wooton, but he added this this an hour ago:

Since writing last night, I've watched further news and slept (or not slept) on this, plus taken on board the overwhelming volume and tone of your responses. I've spoken with the paper's editor this morning and asked that instead of running my column (filed last week) I have some space to write something of my feelings on what's happened and the fact that it mustn't be allowed to happen again – to which he's agreed. I've also decided to take some time to think this through calmly and listen to the facts as they develop – while I do so I won't be writing for the paper.

Here is a summary of today's key events so far.

• The government has said a final announcement on whether News Corporation will be allowed to take full control over BSkyB will take "several weeks". The culture secretary, Jeremy Hunt, has received over 100,000 submissions from the public over the deal – almost all opposed to the takeover. Hunt has insisted the decision has not been delayed due to further hacking revelations, but instead due to the weight of correspondence. The Guardian's Dan Sabbagh said that "in practice this mean an announcement is likely in September".

• The News of the World paid bribes worth over £100,000 to Metropolitan police officers, it has emerged. Investigators at Scotland Yard are now trying to identify up to five officers who received the cash payments between them. Documents relating to the bribes were sent to police by News International. The documents did not name those involved, but did contain pseudonyms.

• The list of companies which have withdrawn advertising from the News of the World or related companies is continuing to grow – and includes Sainsbury's, Ford, DFS, Boots and Specsavers. The website Political Scrapbook says 33 companies have now pulled out, although the list includes some that may not have advertised anyway. A further eight are said to be "considering their position". The government will also "urgently" review its own advertising contracts with the News of the World, according to leader of the Commons Sir George Young. Young told the Commons he would "raise the matter urgently" with the Cabinet Office.

• Ed Miliband has questioned David Cameron's "close relationships" with News International. The Labour leader accused the prime minister of being "two steps" behind public opinion following a deluge of damning revelations over intrusive practices conducted by News of the World, quipping that Cameron and Rupert Murdoch appeared to be the only two individuals in the entire country who believed that Rebekah Brooks should stay in post.

• Sue Akers, the Metropolitan police deputy assistant commissioner who is in charge of Operation Weeting, the police investigation into the phone hacking allegations, has said investigators are going through approximately 11,000 pages of material containing almost 4,000 names and have been contacted by hundreds of people who think they may have been affected.

Virgin Media has tweeted that it tried to pull advertising from the News of the World magazine this Sunday but were told they could not. "We can confirm we won't be placing more ads in NOTW for now."

Over on Alan Rusbridger's Q&A, many readers have asked whether the Guardian or Observer have ever done anything similar to what the News of the World is accused of. The editor-in-chief replies:

General question on what rules we have at the Guardian. We don't pay for stories. Reporters are told not to use private investigators without my permission. A very rare example: I agreed to use someone outside the paper, and that was over evidence of corrupt dealings by a global corporation. The Guardian did not feature on the list of newspapers exposed by the Information Commissioner in 2006. Generally, I think the greater the possible intrusion by journalists the higher the public interest hurdle has to be. I like the guidelines suggested by former spook Sir David Omand for his trade. I think they're good questions for any news organisation * There must be sufficient cause – the intrusion needs to be justified by the scale of potential harm, which might be result from it. * There must be integrity of motive - the intrusion must be justified in terms of the public good which would follow from publication * The methods used must be in proportion to the seriousness of story and its public interest, using the minimum possible intrusion. * There must be proper authority – any intrusion must be authorised at a sufficiently senior level and with appropriate oversight. * There must be a reasonable prospect of success: fishing expeditions are not justified I did, incidentally, suggest that the PCC might incorporate those guidelines into the PCC's editorial codebook, but got a polite rejection.

My colleague Lewis Williamson sends this neat tweet from Primly Stable:

Almost all of the companies still advertising in the Screws are mobile phone networks. Alanis Morissette would call that "ironic".

Here's Boris Johnson stumbling over his words when he is asked about his comments last year that the phone hacking accusations were "codswallop" (thanks to my colleague Haroon Siddique).

What I said then was that there'd been a long-standing investigation carried out by, as far as I can remember, by the gentleman who preceded Mr Yates ...

He finds his stride when the conversation returns to the present day:

It's clear that new allegations about police corruption have come to light and it is vital that if there is any substantiation to those allegations. If it is true that officers were taking money from journalists or private investigators to hand over information then we need to get to the bottom of it as soon as possible ... And that's got to happen now.

Campaign group Avaaz is aiming to get 200,000 messages sent to David Cameron and Jeremy Hunt attacking the BSkyB deal. They are up to 135,000. Alex Wilks of Avaaz said: "People cannot imagine giving this man [the deal] ... He's become toxic ... Politicians want to stay away from Rupert Murdoch, not give him presents at times like this."

Specsavers has also pulled its advertising.

What's Rupert Murdoch been up to so far today? Evelyn Rusli tweets this, plus this picture.

More from Alan Rusbridger's live Q&A, where the Guardian editor-in-chief has said the Press Complaints Commission "can't go on as it is. Its credibility is hanging by a thread."

The charity BeatBullying has suspended its partnership with the News of the World, Sylvia Rowley tells me on Twitter.

My colleague Caroline Davies sends me a statement just put out by Deputy Assistant Commissioner Sue Akers, who is in charge of Operation Weeting, the police investigation into the phone hacking allegations. Akers says she has "huge sympathy" for the phone hacking victims, and will stand by her commitment to contact everyone who has personal contact details found in documents seized in 2006 as soon as possible. She explains why this is taking so long:

We are going through approximately 11,000 pages of material containing almost 4,000 names. In addition we have been contacted by hundreds of people who believe that they may have been affected.

She adds that to protect victims' privacy she is not going to comment on individual cases or details in the media, and says she will expand on these points when she appears before the Commons home affairs committee on Tuesday.

Over on Alan Rusbridger's live Q&A my colleague Roy Greenslade has pitched in with a couple of informative replies.

@Adds … You ask: why are we finding out information on a drip feed basis? The answer is that the contents of the Mulcaire documents are in the possession of the police and, in specific cases, lawyers. I would guess that there is leakage from those sources. @kauto asks: why is only News International being singled out by Nick Davies when phone hacking happened elsewhere? The straightforward answer is that Mulcaire appeared to work only for the NotW, and that's the only hard evidence available. If it happened elsewhere - as I suspect it did - there is no documentary proof. Anyway, I would doubt that it occurred on the NotW's industrial scale.

Over on Wall Street they've rung the bell to start the trading day. My colleague Graeme Wearden is poised at the Reuters terminal, and tells me that shares in News Corporation are gaining a little ground: up 7c at pixel time at $17.54. On Wednesday there was a hefty sell-off, as investors balked at the phone hacking reports from the UK. That pushed News Corp shares down by 3.6%. We'll keep watching events in New York. In London, BSkyB shares are trading at 811p, down nearly 2% today.

Here's a video of Lady Rawling's replies to questions about Jeremy Hunt's forthcoming decision on approving News Corp's BSkyB takeover bid.

_

2.46pm: Channel 4 News says it is going to broadcast information tonight that provides "new insight into how News of the World journalists obtained confidential information from corrupt police".

Alan Rusbridger, the Guardian's editor-in-chief, has started his live Q&A on phone hacking here.

His first answer relates to Peter Oborne's statement in the Daily Telegraph that he warned David Cameron and Nick Clegg about Andy Coulson before the election. What were Cameron and Clegg told that is now in the public domain?" reader Bochi asks. "What have they known all along?" Alan replies:

Peter Oborne is right. Before the election it was common knowledge in Fleet Street that an investigator used by the NoW during Andy Coulson's editorship was on remand for conspiracy to murder. We couldn't report that due to contempt of court restrictions, but I thought it right that Cameron should know before he took any decisions about taking Andy Coulson into No 10. So I sent word via an intermediary close to Cameron. And I also told Clegg personally.

Political Scrapbook and Liberal Conspiracy are organising a Twitter campaign against remaining large advertisers with the News of the World.

Hi, Paul Owen back again. Patrick Wintour has sent this report on how the prime minister and the government have been caught on the hop by the latest phone hacking revelations.

Cameron prizes his moral authority, so if the public comes to see him as a giving a hand-up to a morally depraved organisation, he will find a way to tell News Corp to back off. Delay on the takeover is the least worst option.

A final announcement on whether News Corp's proposed takeover of Sky will be permitted will take "several weeks" after Jeremy Hunt received 100,000-plus submissions from the public, sources close to the minister said this lunchtime, my colleague Dan Sabbagh reports.

Hunt's aides insist his decision has not been delayed in the light of further hacking revelations (which the minister insists are irrelevant to the "media plurality" review he is undertaking). Instead the wait reflects the sheer weight of correspondence he has received, almost all of which is opposed to the deal going through. In practice this mean an announcement is likely in September - although Hunt has said he won't necessarily wait for parliament to be in session to make his announcement.

Here's Kirsty Scott's story on the effect of the phone hacking allegations on Tommy Sheridan's perjury conviction.

The Guardian's Nick Hopkins understands that about half a dozen forces' families have been told that their phones might have been hacked.

"It's a handful so far. The police are contacting the families concerned and then the Ministry of Defence is providing any appropriate support," said a Whitehall source.

FairPensions, a charity that promotes responsible investment by pension funds, says pension investors "should seriously consider whether the takeover of BSkyB by NewsCorp is in the long-term interests of their beneficiaries".

Snippet from a statement by the charity:

As a FTSE 100 company, BSkyB shares can be found in virtually all pension funds in the UK. The question for UK pension providers is whether the takeover of BSkyB by NewsCorp is in the best long-term interests of their millions of members. Holders of BSkyB shares are expected to have a vote on the takeover proposal in the next few months.

Louise Rouse, director of engagement at FairPensions said the allegations "demonstrate to pension investors that corporate reputational risk presents meaningful financial risk for their beneficiaries".

Pension investors should seriously consider whether the takeover of BSkyB by NewsCorp is in the long-term interests of their beneficiaries. We believe these interests extend beyond the price paid for BSkyB shares to include broader social issues like media plurality in this country." ...



Investors must ask themselves whether they are in a position to make an informed vote on the proposed takeover. The parallels with the Kraft takeover of Cadbury's are striking. In that case investors and the Government received assurances from Kraft regarding jobs in the UK only to find the situation rather different once the takeover was complete . In this case shareholders in BSkyB will surely be questioning assurances from NewsCorp regarding the future of the broadcaster.

Two interesting events coming up at 2.30pm: firstly, Wall Street opens – we'll have the latest on News Corp's share prices – and secondly, Guardian editor Alan Rusbridger will be hosting a live chat on phone hacking.

Comments will open on the Q&A at half two, so fire away from then. Alan will be answering your question for two hours.

Michael Willoughby emails telling me not to forget the 38 Degrees petition to David Cameron and Jeremy Hunt, which also demands a stop to the BSkyB takeover.

"Nearly another 100,000. And a day to go," Willoughby says.

Dixons has pulled its advertising with the News of the World. Graeme Wearden emails:

Business editor Julia Finch tells me that Dixons, the high street retail chain, has decided to pull its advertising from the News of the World "until further notice". The company, which was ranked 16th in our list of the top 50 advertisers, is expected to release a statement soon.

Here's Michael White on the crusading David Mellor:

Mellor, Tory ex-culture secretary and tabloid sex-expose victim, the man who warned the media 15 years ago that it was "drinking in Last Chance Saloon" (it's still at the bar ordering doubles), was in robust form on Radio 4's World at One. No, Rupert Murdoch should not now be allowed to get BSkyB, he opined. Can this be the same Mellor who, as the ambitious mid-ranking home office minister he was in 1990, steered through its commons committee stage, the Broadcasting Bill which exempted Rupert's Luxembourg-based satellite from constraints placed on UK rivals? It can be and it was.

The Financial Times is reporting that the decision on BSkyB has been delayed "until September".

More as we get it.

Over 130,000 people have signed a petition calling for the government to reject News Corp's bid to gain full control of BSkyB "until there's a full Competition Commission review and a full public inquiry into phone hacking".

Check the petition out here.

Angelique Chrisafis, our correspondent in Paris, tweets:

@achrisafis Le Monde front-page editorial on #hackgate: "There's a terrible contradiction between what #NotW practises and what Newscorp preaches"

The New York Times has an interesting piece on how Rupert Murdoch has reacted to potentially damaging situations at his other newspapers in the past – although the paper notes that the NOTW hacking "threatens to stain the company's image in a way that other embarrassing incidents at News Corporation's far-flung media properties ... have not".

In the past, Mr. Murdoch has either outlasted his critics or acted swiftly to limit the fallout. And on Wednesday he was in damage-control mode again. The company moved quickly to denounce the hacking and announce its intention to cooperate with the police, but the damage was proving difficult to contain. [...] The News Corporation is no stranger to scandal. Fines for indecency, lawsuits charging anticompetitive business practices and libel claims are a fact of life for the company, which has been able to easily absorb the financial inconvenience. In 2009, advertisers boycotted Glenn Beck's Fox News program after the host said President Obama was racist. Taking the action in stride, Fox said the advertising dollars merely shifted to other time slots. And in January the company paid a $500 million settlement to Valassis Communications, which had accused a News Corporation subsidiary of trying to obtain a monopoly in the in-store coupon business. The most recent prominent incident with the Federal Communications Commission came last year after the network showed an episode of "American Dad" in which a horse appeared to ejaculate on a character's face. The commission proposed a $25,000 fine. This week, The New York Post was sued for libel by the hotel maid who has accused Dominique Strauss-Kahn, the former International Monetary Fund chief, of sexual assault. In its coverage of the case, The Post has called the maid a prostitute.

Simon Bowers reports that a newsagent near Soham is among those refusing to stock the News of the World.

Nav Aggarwal, owner of five LocoEspresso convenience stores in Cambridgeshire and Essex, is among the few promising he will not stock News of the World. He said he took the decision because one of his shops, at Ely station, is close to Soham where Holly Wells and Jessica Chapman were murdered. "Where we are based someone has to do something. Soham is only four miles down the road. I know one of the parents use the station every day. I cannot push the paper in their faces until they until they [the parents of Wells and Chapman] get a public apology." Aggarwal said he typically sold more than 100 copies of News of the World a week. Budgens franchise operator Andrew Thornton said he would not be selling it in his two stores in North London. "Thornton's Budgens have decided to stop stocking the News of the World until further notice," he said in a statement. "Their actions have effected people in our community and communities around the country and there must be consequences for the complete lack of morality that seems to be part of the papers culture." He is encouraging other retailers to follow suit and backs a boycott of the paper.

The Evening Standard reports that Met police "received more than £100,000 in unlawful payments from senior journalists and executives at the News of the World", and that arrests will be made within days:

The bribes were made to officers in "sensitive" positions in return for confidential information. Sources say several "high-profile" NoW staff and the officers concerned are likely to be arrested within days and that "serious crimes" have been committed. [...] But the extent of corruption involving Scotland Yard and the paper is among the most damaging revelations so far. TheStandard has been told that unlawful payments to police have been made over several years. "They were very large sums, coming to more than six figures," said the source. "They were running a criminal enterprise at the News of the World. Serious crimes have been found. The question now is about the scalps. There will be high-profile arrests at the paper." The corrupt payments were discovered after News International began a trawl of internal emails earlier this year in a bid to discover the full extent of the paper's involvement in hacking.

The Evening Standard says the emails are "believed to relate to the period after Andy Coulson became editor in January 2003 and not to the preceding years when the current News International chief executive Rebekah Brooks ran the paper".

Re Tesco, James Robinson has noticed that Andrew Higginson, Chief Executive of Retailing Services and Group Strategy Director at Tesco, also sits as a non-executive director on the BSkyB board.

James does note, however that Jacques Nasser – former CEO of Ford – is also a non-executive director at BSkyB. Ford pulled its advertising with the News of the World on Tuesday.

Tesco has said it will not pull advertising in the NOTW.

My eagle eyed colleague Laura Oliver has spotted this tweet from Chris Bryant MP – of course an alleged victim of NOTW hacking:

@ChrisBryantMP Just decided I'm not doing my weekly shop in tesco this evening following their decision to continue advertising with #NOTW

Statement from the Metropolitan police on their decision to refer the hacking investigation to the Independent Police Complaints Commission.

The decision was taken "in view of the significant public and political concern" – full statement below, with thanks to reporter Caroline Davies:

The MPS met the IPCC on 22 June to inform them and discuss the content of documents provided by News International on 20 June containing information relating to alleged inappropriate payments to a small number of MPS officers. At that time it was agreed that the MPS would conduct the investigation and if, or when, any officers were identified the cases would be referred to the IPCC. However, in view of the significant public and political concern expressed following the publication of this information the MPS has today, Thursday 7 July, made a formal referral to the IPCC. MPS Deputy Assistant Commissioner Sue Akers, said: "We recognised the gravity of this case from the outset and involved the IPCC at the first opportunity. I strongly believe in and welcome independent oversight, especially in a case such as this, where public confidence in the police is seriously at risk."

Statement from Boots, courtesy of colleague Rupert Neate:

"In light of the evolving situation, we have put on hold further advertising with the News of the World. An advertisement, which was printed some time ago, however, will appear in this Sunday's Fabulous magazine."

Rupert adds that Boots is NOTW's 7th biggest advertiser, spending £900k a year.

My colleague Hannah Waldram has been looking at how US news websites are covering the hacking, with help from Guardian commenters PoorButNotAChav and snowflake:

Tim Gatt, a producer at Sky News, tweets:

@TimGatt The Independent Police Complaints Commission has been asked to supervise the Metropolitan police's internal investigation into phone hacking.

The Independent Police Complaints Commission has been asked to supervise the Metropolitan police's internal investigation into phone hacking.

More as we get it.

Bit more on the Diana news – Dodi Fayed's solicitor, Michael Mansfield, said he received a letter telling him his phone may have been targeted about six months ago. Mansfield has also said police should not lead the investigation into the NOTW hacking.

From PA:

Police gave no details of when his mobile phone may have been hacked. Mansfield, a prominent campaigning lawyer who also represented the family of police shooting victim Jean Charles de Menezes, said police should not be in charge of the investigation. "This is information that must have been available for some time," he said.

"What I find so disturbing is that there was this investigation in the first place.

"If the sort of information is correct that police officers have been handed money, then the whole investigation needs to take place independently."

Asda has become the latest company to suspend its advertising in the News of the World, according to Sky News.

Hello there, this is Adam Gabbatt taking over from Paul.

The list of people allegedly targeted by the News of the World continues to grow – Princess Diana has now been dragged into the row, according to PA.

Michael Mansfield QC, who represented the family of Dodi Fayed at the inquest into her death, has received a letter from Scotland Yard saying he was on a list of possible targets, according to the agency.

"Journalists would have been trying to get stories about Diana. It is particularly disturbing," Mansfield said.

Reader kaleeyed points out that the NoW now has statements from Colin Myler, Rebekah Brooks and Rupert Murdoch on its website

O2 spends an estimated £1.2m a year with the NOTW, according to my colleague Rupert Neate.

Here's the full story on Sainsbury's decision to pull advertising from the News of the World, which Jason Deans calls "potentially [the] most commercially damaging" news News International will have been given today.

Hélène Mulholland has more details on Ed Miliband's comments on phone hacking this morning. The Labour leader suggested David Cameron's leadership on the scandal suffers because of his "close relationships" with individuals embroiled in the affair at News International.

He quipped that Cameron and News Corporation chief Rupert Murdoch appeared to be the only two individuals in the entire country who believed that Rebekah Brooks, News International chief executive, should stay in her post. "I think they are both wrong and way out of step with public opinion," said Miliband, adding that Cameron should put aside his relationships with Brooks and Murdoch and come out and say right thing, "because that is what the country expects of the prime minister". Miliband made the case for just one public inquiry to be conducted, led by a judge, with powers to compel witnesses and a remit that covered all the main issues to do with practices in the newspaper industry and the relationship between the police and newspapers. "I think the country will be expecting more from the prime minister this time," Miliband told the BBC. "He's not been giving the leadership the country needs on this issue. He seems frankly two steps behind public opinion, where public opinion is. He does not seem to be working with the necessary speed of what people want to see." Miliband said he would not be buying the News of the World this Sunday.

Scotland Yard has warned Diana inquest lawyer Michael Mansfield QC that he may have been targeted by News of the World phone hackers, the barrister has told the Press Association.

The head of Europe's human rights watchdog has called for editorial responsibility in the midst of "cut-throat" media competition. Responding to the latest phone-hacking allegations engulfing the News of the World, Thorbjorn Jagland, secretary general of the Council of Europe, said:

Telephone hacking is a crime. In times of cut-throat competition in the media sector, journalists and editors must act responsibly, strengthen their self-regulation, and respect citizens' right to privacy ... Governments need to act resolutely to fight and to prevent violations of this fundamental right, whilst actively protecting and promoting freedom of speech.

Over on the Politics blog, Andrew Sparrow lists the three main points from Lady Rawlings's replies to Lady Royall in the Lords.

• She said that the inquiry being set up by the government would probably be led by a judge.

• She said that Jeremy Hunt, the culture secretary, was satisfied by the safeguards offered by News Corporation to protect the impartiality of Sky News. In other words, she said that Hunt is not going to block the News Corporation takeover of BSkyB.

• But she also said Hunt was "not going to rush into" a decision to approve the bid. Hunt wanted to go through the responses to the consultation, she said. That would "take time". This backs up Robert Peston's claim that the Hunt will not approve the bid until September at the earliest.

Mobile phone company O2 has also pulled its advertising from the News of the World. A spokeswoman said:

We share the concerns of customers and employees about these quite shocking claims. While the situation unfolds, we will not be purchasing advertising in the News of the World. We'll continue to monitor the situation closely.

Sir George Young, the leader of the Commons, has just said that the government is to "urgently" review its own advertising contracts with the News of the World. Young told the Commons he would "raise the matter urgently" with the Cabinet Office following the decision by a number of private companies to cut their advertising with the newspaper.

Military officials said today that they first learned that families of the bereaved might have been hacked when journalists began asking questions about the matter yesterday, reports Nick Hopkins.

Since then, the Ministry of Defence has been in contact with officers from Scotland Yard's Operation Weeting inquiry - the most reason call being made this morning. It seems that the Met does still do not know how many families may have been affected, but are taking a cautious approach and contacting anyone whose name appears in Glenn Mulcaire's notebook. The MoD already has an infrastructure for pastoral care of relatives of dead soldiers, and will use this to provide support for any family that might have been affected. "We have no idea how many families have been affected," said a source. "Only the police know that and the scale of what they are doing is huge. If a name appears in a notebook, they have to tell that person that there name has been collected in an information gathering operation. The Met is informing people, not the Ministry of Defence."

My colleague Adam Gabbatt has just been looking again at the opening exchanges in the Lords betwen Lady Royall, leader of the opposition in the upper house, and Lady Rawlings, a government whip.

Royall:

To ask HMG, in the light of the loss of public and commercial confidence in News International and the imminent closure of the consultation period, whether they will suspend consideration of News Corporation's bid to take over BSkyB.

Rawlings:

The culture secretary takes the view that News Corporation have offered serious undertakings, and discussed them in good faith. In all the circumstances and given that the implementation of those undertakings will be overseen by the monitoring trustee and thereafter monitored and, if necessary enforced, by the OFT, he takes the view that there are sufficient safeguards to make certain compliance with the undertakings.

Royall:

My lords I think the house and indeed the country will know that that is the wrong answer. Could the government confirm that the secretary of state does legally have the discretion to differ if he so chooses. Refusing to suspend the process will be seen as incomprehensible, both by the public and by News Corp's advertisers and investors, so could the minister set out for the house its reasons for not doing so, or if she is unable to do so now could she do so in writing. And finally will the government provide for this house to debate those matters next week?

Rawlings said the debate was in the hands of "the usual channels".

She added: "Regarding the secretary of state's discretion, he has quasi-judicial discretion after the decisions of Ofcom and the OFT. Regarding the delay that the noble baroness asked about, the consultation hasn't closed, it closes tomorrow on Friday 8th. The secretary of state will need to consider all the answers and all the presentations. There is no date at present for his decision. The secretary of state will not be rushed, he will be fair. He has to make it strictly on media plurality, within the law. He, like everyone else, and like the press, all have to work within the law."

Shares in BSkyB have fallen again this morning as the phone hacking scandal threatens to derail Rupert Murdoch's takeover bid. My colleague Graeme Wearden has more details.

There was a rush to sell shares in BSkyB as soon as the London stock market opened for business. They briefly traded as low as 805p, but are currently being traded for 815p (a fall of 12p or 1.45%). The feeling in the City is that the News Corp deal will go ahead, but if Jeremy Hunt does bow to pressure and suspend the bid then investors will have to wait longer to cash in their shares. Many hedge funds have bought into BSkyB since the bid was launched in June 2010, and until recently were expecting a healthy profit - and soon. BSkyB shares were worth 850p before the Milly Dowler revelations were published. At 815p, almost £600m has been wiped off the company's value. Bad news for those hedge funds, but potentially good for Murdoch if the deal eventually goes though.

Robert Lee, the head of media at the British Legion, has told the Guardian's Nick Hopkins that he called the News of the World this morning to explain the decision to cut ties with the paper. Nick writes:

The NoW of had worked alongside the Legion in the "Justice for the Brave" campaign, which forced the government to enshrine the military covenant in law. "We couldn't be approaching No 10 about issues like that while the News of the World is under investigation by the police over something as serious as this" said Lee. "I spoke to the News of the World to explain our position. It was a call that had to be made. "The families of the bereaved have enough to cope with without the worry that their phones might have been hacked. Hundreds of families have been affected by this." Lee said the News of the World had pointed out that nobody had been prosecuted over the alleged hacking of forces' families, but that the paper "did not attempt to try to argue us out of our position." The Legion was working on a new campaign with the paper - to demand the government establish an office for a chief coroner - but that had now been abandoned too, said Lee.

"Our main concern is the welfare of forces families," he added.

Newsflash: Strathclyde Police have been asked to look at evidence given by witnesses during the Tommy Sheridan perjury trial in light of recent allegations about phone hacking at the News of the World, the Crown Office said today. Some of you had been asking about this case in the comments.

Lady Scotland says the government could have chosen to examine the BSkyB deal on grounds of broadcasting standards as well as media plurality, but didn't.

Rawlings does not answer the question but repeats that "there will be no decision right now". She adds:

The plurality as was said by Mr Ed Miliband in the other place - the hacking has nothing to do with the plurality.

With that the debate is over.

Andrew Sparrow has the top lines from Ed Miliband's interview on phone hacking this morning.

• Miliband said that all politicians had "lessons to learn" about their relationships with Rupert Murdoch. Now it was important for them to "come out and speak the truth without fear and favour".

• He renewed his call for Rebekah Brooks to resign. "The only people in the world who seem to think that Rebekah Brooks should carry on in her position are Rupert Murdoch and David Cameron," he said.

• He accused Cameron of not showing leadership on this issue. Cameron was "two steps behind public opinion", he said.

• He said the government should suspend its decision about allowing News Corporation to take over BSkyB.

• He said there should be just one inquiry, not two. But it should be led by a judge, he said. And it should have the power to compel witnesses to appear.

• He said that the first police investigation into phone hacking was "wholly inadequate".

Rawlings says she has sympathy for Lord Prescott, who has been a victim of phone hacking. Personal freedom and privacy is of great importance, but so is the freedom of the press. Hacking is illegal and wrong, and these cases are disgraceful and shocking, she says. It is a "foul deed" - the press have to abide by the law like all of us.

Does Rawlings agree the inquiry should be chaired by a judge and have the power to subpoena evidence?

It would seem that would be necessary but there are several inquiries going on, she says. It will probably have a judge, she says, but at this stage I cannot give details.

On Twitter the BBC's Robert Peston says the volume of submissions on BSkyB means Jeremy Hunt won't be able to make his decision until September at the earliest.

Royall asks Rawlings to say why the government will not suspend the decision. The consultation has not closed; it closes tomorrow, says Rawlings. The secretary of state will need to consider all the submissions; there is no date set for his decision; he will not be rushed.

He has to make the decision strictly on grounds of media plurality, she says.

Lady Rawlings replies that there are sufficient safeguards in place. Royall says that is the wrong answer and the secretary of state has discretion to suspend the process.

Over to the House of Lords for Lady Royall's urgent question:

To ask HMG, in the light of the loss of public and commercial confidence in News International and the imminent closure of the consultation period, whether they will suspend consideration of News Corporation's bid to takeover BSkyB.

The BBC is reporting that the culture secretary has received 100,000 submissions on this takeover bid, which will delay Jeremy Hunt's decision. Hunt will probably appreciate this since it would be so politically toxic to approve the bid in the current climate.

Steve Richards in the Independent says the willingness of politicians to attack the Murdoch empire in the Commons yesterday marks a major turning point (thanks Andrew Sparrow to on the Politics blog).

The tyrants lose their swagger and those that lived in fear dare to speak out. The dynamics of the News International saga are similar to the ones that shape the fall of dictatorial regimes, except in this case it is some mighty media executives who are suddenly fearful and the politicians who are liberated. Yesterday's exchanges in the Commons were ones I thought I would never witness. They are of historic importance. Senior elected politicians dared to challenge the powerful Murdoch empire and there was an air of catharsis as they did so ... For the first time during Prime Minister's Questions, [Ed] Miliband could display authentic anger without fear of retribution from News International. One of his private objectives when he became leader was at some point to challenge the debased media culture in Britain. Suddenly his objective becomes public and he will not be torn apart by The Sun this morning or the News of the World on Sunday. It is impossible to overestimate the degree to which, until this week, Murdoch's newspapers were stifling the voice of another scared party leader.

The Belfast Telegraph is reporting that Gary Lineker is consider his position as a News of the World columnist. (Thanks to commenter Ramones1234 on the Politics blog.)

The owner of a Budgens supermarket in north London has tweeted that he will not be selling the News of the World "for now" and is encouraging other retailers to do the same, my colleague Haroon Siddique points out. It's a franchise so he only speaks for his own branch.

Andrew Sparrow has a bit more on the urgent Lords question on BSkyB coming up in 10 minutes.

Lady Royall, the Labour leader in the Lords, will ask the government "in the light of the loss of public and commercial confidence in News International and the imminent closure of the consultation period, whether they will suspend consideration of News Corporation's bid to takeover BSkyB". Lady Rawlings, a government whip, will respond.

My colleague Hélène Mulholland has the full story on Boris Johnson's comments on phone hacking this morning. He said allegations that journalists had hacked into phones of young girls who had gone missing or the relatives of people killed in Iraq or lost their lives in 7/7 were "unbelievable" and needed to be investigated forthwith. But the mayor of London also defended Rupert Murdoch, the head of News Corporation, who he said had achieved a "very considerable" amount for British journalism over the past four decades. He also refused to call for Rebekah Brooks to stand down. Here is what Johnson said about the inquiry into phone hacking:

This whole thing has become deeply, deeply sick in people's minds and I think the sooner it is cleared up and everyone understands exactly what went on over the last 10 years or so, the better. I certainly think there should be an inquiry and it should be a judge-led inquiry and it should be immediate and I think there should be no holds barred. Get editors, the proprietors, in and let's hear exactly what's been going on.

Asked to comment on whether David Cameron's perceived relationship with the Murdoch empire had damaged the Tory leader, Johnson said:

I feel very strongly that there are lots of people have very, very mixed and contaminated motives in all this. People rant on about the way Murdoch has corrupted and corroded and our political debate and this kind of thing. I'm not a believer in that line of argument. What Rupert Murdoch has done for British journalism over the last 30 to 40 years is actually very considerable.

On whether Brooks should quit, Johnson said:

Not every journalist was involved in phone hacking, just as not every [MP] was involved in fiddling expenses. I'm not going to pronounce on the individual fates of people in this manner but plainly what is going on at News International is very tough for them. They have to investigate it, they have to get the bottom of it as soon as possible.

More on the House of Lords urgent question coming up at 11.30am. Lady Royall, the shadow leader of the Lords, has tabled the question, which urges the government to suspend consideration of News Corporation's takeover bid for BSkyB.

Liam Fox, the defence secretary, has also spoken out about the allegations regarding servicepeople's families' phones:

If these claims prove to be true then the intrusion into the private lives of bereaved families would be an outrageous breach of trust and I would strongly condemn anyone involved. Our armed forces and their families rightly deserve the respect and support of the nation particularly when their loved ones have made the ultimate sacrifice.

The full story on the Royal British Legion dropping the News of the World as a campaign partner is here.

At Comment is free, Jacqui Putnam, a 7/7 survivor writes that she "can hardly find the words to say how outraged and appalled I am to learn that a respected newspaper such as the News of the World appears to have stooped so low as to intrude on the private grief of those who've lost their loved ones".

Breaking news: urgent question on BSkyB deal to be asked in House of Lords at 11.30am … More details soon ...

Last night's Newsnight on BBC2 included an interview with a "former News of the World insider", whose identity was disguised. The News of the World confirmed yesterday that payments were made to police officers for access to confidential information. In order to cover their tracks when taking money from journalists, corrupt officers were signed up as "confidential police informants" under pseudonyms, according to Newsnight's source. Adam Gabbatt has more:

The source said the Met had identified "three or four" officers who were paid by News of the World. They told Newsnight that the sums were "tens of thousands of pounds" and were paid by senior journalists. "The ruse they came up with was that they signed up certain journalists within the organisation as 'confidential police informants' and they went through the whole charade of signing them up," the source said. "They would be assigned codenames, pseudonyms, and that pseudonym would be registered as a confidential reliable police source. When they actually carried out the operation of converting a name or address into a phone number or vice versa, they would tap into the system: 'Information received from X, Frank, Jim: reliable informant,' that this person is dealing in drugs and is using this phone number. "We converted the phone number to find out what the address was or to find out what the phone number was that he was dealing with." Newsnight said the account had been confirmed by a second source.

Dave Hill has written a piece about Boris Johnson's attitude to News of the World and the phone hacking allegations, which has undergone what he calls a "handbrake turn".

Like David Cameron, Boris needs to be seen to be appalled by what occurred at the News of the World when Brooks was its editor, but needs even more to stay on good terms with her and the full stable of Murdoch papers for which she, as News International's chief executive, is now responsible. He and Lynton Crosby, the aggressively rightwing strategist running his re-election campaign, will surely want to enjoy the hospitality of the Sun's equally aggressively right-wing pages again in the months to come.

Here's a gallery of today's front pages. The Daily Express goes with a picture of Madeleine McCann and the headline: "Hacking scandal: was Maddie's family targted?" (The case of Madeleine McCann is expected to be one of the first to be re-examined by detectives.) It is the Daily Mail's main front-page story, looking at the "war widows" angle. The Daily Mirror also makes it the front-page splash – "Sky falls in on Murdoch" – claiming News Corp's BSkyB deal was now in "turmoil". The Daily Star fits it into a small, above-the-fold slot alonside Coronation Street lesbians, Rio Ferdinand's sex life and Wills and Kate canoeing. The Financial Times looks at the effect of News Corp's business: "Murdoch investors take fright," while the Independent writes more broadly: "Murdoch empire in crisis." Its little brother the i takes a similar tack. The Times is not included (News International will not let us show you the Sun or the Times), but its front page headline concentrates on yesterday's parliamentary debate – and the paper also claims five journalists and newspaper executives suspected of involvement in phone hacking are expected to be arrested within days. The Sun has a paragraph on the story under the masthead – quite prominent coverage for that paper.

Over at the Daily Telegraph, whose front-page headline is about the families of war dead, columnist Peter Oborne says the "disgusting" phone hacking allegations and revelations "concerning [David Cameron's] friends and associates from Rupert Murdoch's News International" have "permanently and irrevocably damaged" the prime minister's reputation. "He has made not one, but a long succession of chronic personal misjudgments." He criticises Cameron's friendship with Rebekah Brooks and his decision to appoint Andy Coulson, the former editor of the News of the World, his director of communications.

Sainsbury's has announced it will not advertise with the News of the World until the phone hacking investigation has concluded – "due to the rising concerns of our customers".

The chief of the defence staff, Sir David Richards, has said that if allegations about hacking the phones of military families were proved, he would be "appalled".

Here's my colleague Hélène Mulholland's full story on the comments by Lady Buscombe, the chair of the Press Complaints Commission. As well as attacking the "extraordinary decision" by Rupert Murdoch to allow Rebekah Brooks, chief executive of News International, to oversee the investigation into phone hacking at the News of the World, Buscombe said it was now clear that the PCC was not given the "full facts" by News International and that its corporate culture was "clearly there to mislead us". The PCC conducted its own inquiry into phone hacking and insisted in 2009 it was not misled by NI, before conceding this week that the watchdog had been "lied to".

James Robinson, the Guardian's media correspondent, has just been in touch to say there are rumours that James Mellor, the News of the World's deputy news editor, is off to take the equivalent job at the Sunday Times. He is a newish recruit from the Mirror. He will serve his notice, James says, but the NoW is now short of experienced news executives as news editor Ian Edmondson was sacked at the start of the year and James Weatherup, who was arrested in April on suspicion of conspiring to intercept mobile phone messages, is on gardening leave. James says: "Despite Mellor's move there is no sign of a staff exodus at the paper, but it is obviously not a great atmosphere in which to work."

Over on his Politics blog, Andrew Sparrow notes that Npower is also suspending its advertising with the News of the World.

He also points out that Brian Paddick, the former Metropolitan police deputy assistant commissioner and London mayoral candidate, has said that some officers received up to £30,000 from journalists for information.

Chris Huhne, the climate change secretary, as mentioned earlier, has called for the inquiry into relations between police and media to be judge-led. He also suggested Rebekah Brooks, the News International chief executive, should resign.

An editor, frankly, knows what's going on in her or his newspaper and either they know what's going on in which case the editor of the News of the World at the time was either complicit in some criminal activity or they're extremely incompetent.

And Chris Bryant, the Labour MP who set up yesterday's parliamentary inquiry, has suggested the News of the World is shredding information.

We need a full inquiry into every aspect of it, including why the police did nothing, and the only thing I'm depressed about with what the prime minister said yesterday is it needs to happen now, it needs to be set up now, it can't wait. We should have people appointed, they should have the powers to seize all the documents, because I'm sure stuff is being shredded at the News of the World even as we speak.

The Royal British Legion has dropped the News of the World as its campaigning partner, it announced this morning, and is reviewing its advertising budget with parent company News International.

The charity said it had been "shocked to the core" by the reports that Glenn Mulcaire, the private investigator working for the tabloid, illegally intercepted the voicemails of relatives of dead servicepeople.

Hello and welcome to today's phone hacking live blog, as the fallout continues from the Guardian's revelations that the News of the World intercepted voicemails left on a phone belonging to murdered schoolgirl Milly Dowler and the news that the paper targeted the phones of families of victims of the 7/7 attacks.

Here are this morning's key developments:

• Scotland Yard is investigating claims families of members of the armed forces killed in Afghanistan and Iraq may have been targeted by Glenn Mulcaire, a private investigator who worked for the News of the World.

Ed Miliband said he was disgusted by the allegations and warned that if they were true the hacking would be a "gross and shocking betrayal" of British servicemen and women. The Labour leader said:

I am disgusted by the latest allegations about the hacking of the families of fallen soldiers. If true, they represent a gross and shocking betrayal of our heroic servicepeople and their loved ones. It is grotesque beyond belief that these actions are alleged to have been committed on behalf of a news organisation committed to the military covenant. It reinforces the need for the police to do their work and for a public inquiry to be swiftly established so that justice can be done and the truth established.

Miliband has called for the resignation of News International's chief executive, Rebekah Brooks, and demanded the government's decision on the proposed takeover of BSkyB by News Corporation, parent company of the News of the World, be referred to the Competition Commission (see next item).

Rose Gentle, whose son Fusilier Gordon Gentle was killed in Iraq in 2004, has instructed her lawyer to contact police to find out if her phones and those of other families were targeted. Gentle called for an inquiry to begin immediately and said the hacking of dead soldiers' relatives' phones would be "pretty disgusting" if true. She told the BBC Radio 4 Today programme:

It's like a living nightmare, just waiting for a knock at the door again to be told some bad news … The people responsible should be held up and stand up in court.

Jim Gill, the stepfather of Second Lieutenant Richard Shearer, who was killed in Iraq in 2005, said his family had suspicions that their phone was being hacked but they had not yet been contacted by police:

It is very distressing. The terrible thing is that we're not surprised by it. It is distressing for all the people who have been hacked, especially the people who are going through grief. We thought the phones may be being listened to but we did not think it was the press.

• David Cameron and Nick Clegg are wrangling over the membership and status of the inquiries that will be held into the phone hacking and wider questions about the future of media regulation.

The prime minister bowed to pressure to hold at least one inquiry but is resisting calls from Clegg for a judge to take charge.

On the Today programme this morning, Boris Johnson, the mayor of London, called for the inquiry to be judge-led and to start immediately. Chris Huhne, the climate change minister, also called for a judge to lead the inquiry.

Asked whether she was happy with the inquiry announced by David Cameron, Gentle said: "Happy with the inquiry, but it has to start now, and if it's true that they've done it, it has to go further."

• The differences between Clegg and Cameron came as the government faced calls from across the Commons as well as from City shareholders to delay its final decision on the proposed takeover of BSkyB by News Corporation, parent company of the News of the World.

The scandal hit shares yesterday in BSkyB, which fell 18p to 827p on the London market, as concerns grew over the possible impact it could have on News Corporation's bid for the satellite broadcaster. And in the US last night, News Corporation was among the biggest losers on Wall Street's Dow Jones index, falling 3.6%.

Simon Hughes, the Liberal Democrat deputy leader, has said he will ask Ofcom to exercise its right to assess whether the directors of News Corp were "fit and proper" to take full control of BSkyB.

• Lady Buscombe, the chair of the Press Complaints Commission, said it was "extraordinary" that Brooks was leading the internal inquiry at News International and said all executives at the company needed to examine their consciences. Buscombe told BBC Radio 4's Today programme:

The corporate culture was clearly there to mislead us. We were misled by commission or omission.

She refused to say who at News International had misled the PCC in the past, but said:

The whole question, of course, is raised: are they still in power? What does that mean? The truth is, I think it's extraordinary that Rupert Murdoch has asked Rebekah Brooks to lead their own internal inquiry into this. In any other business that would not be allowed to happen. I don't know now whether she lied to me. All I'm saying is there are allegations out there and we have to be really careful about how we respond. And I think it's important that all the executives at News International actually look to their own conscience. They need to give us the facts. We need to find out the facts.

Chris Bryant, the Labour MP who set up yesterday's parliamentary debate on hacking, told BBC Breakfast that if Brooks had a "shred of decency" she would resign. He called for the police inquiry to be handled by a police force other than the Met.

• Nick Davies explains how police warned Rebekah Brooks her paper was aiding two murder suspects by spying on the office investigating them.

• Here are News International, the police and the Press Complaints Commission's statements and denials regarding phone hacking since 2007.

• Andrew Sparrow will be covering events at Westminster today here.

• You can read all the Guardian's phone hacking coverage from today and from the archives here.