The News of the World phone-hacking crisis is intensifying, and today may well turn out to be a crucial day for the paper - and perhaps even for the future of the British newspaper industry. New revelations about the behaviour of the paper are coming thick and fast.

The Guardian leads on the news that relatives of victims of the 7 July 2005 attacks were targeted by the paper, the BBC says that News International has uncovered emails showing that payments were made to the police by the paper when Andy Coulson was editor, apparently with Coulson's approval, and the Independent says that Rebekah Brooks personally commissioned a search for information by one of the investigators subsequently used to trace the family of Milly Dowler.

And in the Commons today we've got PMQs, followed by a three-hour emergency debate on the phone hacking affair. By the end of the day we will have a much better idea as to if - or, rather, when (because it seems inevitable) - there will be an inquiry into the phone-hacking affair. It's possible, too, that we may see Rebekah Brooks resigning - the pressure on her is enormous - but as I write this morning she seems determined to cling on.

PMQs will be at 12pm and the debate should start at about 1.45pm (because we're expecting a statement from Cameron on Afghanistan). MPs won't actually be asked to vote to set up an inquiry. There was a suggestion last night that there could be a vote on a substantive motion calling for an inquiry, but Chris Bryant, the Labour MP who used an unusual parliamentary procedure to persuade the Speaker to allow the debate, told me this morning that a substantive motion of that kind was not allowed under the rules. Instead MPs will just debate a motion saying "that this house has considered the matter of whether there should be a public inquiry into the phone hacking at the News of the World; and the conduct of the Metropolitan Police Service between 2006 and 2011".

Members of the public are not allowed to participate in Commons debates. But the Labour MP Tom Watson will be speaking and, on Twitter, he's inviting people to suggest ideas for his speech. Do get in touch with him if you want to have your say.

Today I will be focusing almost exclusively on phone hacking and PMQs. Other political stories will probably only get a brief mention.

On the Today programme Graham Foulkes, whose son died in the 7/7 bombings, said that he would like to have a meeting with Rupert Murdoch to discuss the news that the relatives of 7/7 victims were targeted by the News of the World. "I would very much like to meet him face to face and have a very in-depth discussion with him about responsibility and the power that he has and how it should be used appropriately," Foulkes said. As PoliticsHome reports, Foulkes said the thought that journalists were listening to the private conversations he was having at the time was "horrendous".

After the explosions in London nobody from the authorities contacted us or any of the families at all for quite some days so we were in a very dark place there, and we were using the phone and frantically trying to get information about David and where he'd been and if he was in hospital or whatever, and talking very intimately about very personal issues. The thought that these guys may have been listening to that is just horrendous ... It kind of fills you with horror really because we were in a very dark place, and you think that its about as dark as it can get, and then you realise that there's somebody out there that can make it even darker.

Later on the programme Simon Greenberg, director of corporate affairs at News International, said that Foulkes's call for a personal meeting with Murdoch was "something that we would consider".

Huffington Post have launched in the UK today. They've chosen a good day to jump in. Their phone hacking coverage includes a blog from the Guardian's own Roy Greenslade, who says that if the advertising boycott of News of the World escalates, Rebekah Brooks will be forced to quit.

As many of us have been saying for years, that hacking - which is, of course, an illegal act - took place as a matter of course at the behest of the Wapping newsroom. It was used to discover private information about anyone - actors, PR agents, secretaries, footballers, TV presenters and people caught up in murder investigations - deemed likely to provide sales-winning copy for the newspaper ... Commerce was behind the hacking. Commerce will decide [Brooks's] fate.

The Times has got the News of the World story on its front page (paywall) - but it's focusing on payments to the police, not phone hacking. The News of the World gave the Metropolitan police information some time ago about payments being made to police officers at the time when Andy Coulson was editing the paper, but this information has only just become public. On the Today programme Simon Greenberg, News International's head of corporate affairs, said the information was released because Vanity Fair were researching an article that was going to allege, wrongly, that the company had emails detailing the payments and that it hadn't handed them over to the police. But, as Nick Robinson argued on Today, focusing on payments to the police may help the company because it focuses media attention on Coulson, and therefore David Cameron's decision to hire him as his communications chief in Downing Street.

Labour's Tom Watson has just told BBC News that he thought the "Coulson authorised payments to the police" story running on the BBC last night and prominently in the Times today (see 9.00am) was a distraction exercise.

This is desperation from News International. They are trying to protect Rebekah Brooks, who rightly faces the ire of the nation today.

Watson also said that the Press Complaints Commission was "probably finished" and that the inquiry into the affair would have to be judge-led.

This last point is important. It now seems inevitable that, at some point, there will be an inquiry into press standards. But there's a huge difference between a commission meeting in private, and a judge-led inquiry with the power to subpoeana witnesses and force them to give evidence on oath in public. Listen carefully for what ministers have to say about this. They will be under pressure (not least from certain figures in the newspaper industry, I suspect) to go for the minimum option.

Alan Rusbridger, the Guardian's editor-in-chief, has just told BBC News that Jeremy Hunt, the culture secretary, should delay the decision on whether to allow News Corporation to buy the whole of BSkyB. The latest consultation on the plan closes at midday on Friday, and Hunt was expected to approve the deal before the end of the month. But he should announce a pause, Rusbridger said, and challenge News International to seek a judicial review of his decision if they dare. (Hunt gave details about what stage the bid has reached in a statement to the Commons last week.)

Rusbridger also said that, if David Cameron were to announce an inquiry, that would "calm a lot of nerves", and that Press Complaints Commission needed to be reformed.

Avaaz, an online campaigning organisation, is inviting people to sign an online petition saying News Corporation should not be allowed to buy BSkyB until the Competition Commission has investigated and an inquiry into the phone hacking affair has been carried out. Avaaz collected more than 40,000 names on a petition submitted to the last News Corp/BSkyB consultation. More than 60,000 names have already signed the latest one, which will be open until the consultation closes on Friday.

And while we're on the subject of campaigns, Sunny Hundal at Liberal Conspiracy is inviting readers to contact firms that advertise in the News of the World demanding that they withdraw their advertising. He says that firms that have not pulled out by lunchtime will be "named and shamed" (my phrase) in the Commons this afternoon.

How is the Sun covering today's story? "Loyally" is the word, I think. Here's a flavour of their story.

FORMER News of the World Editor Rebekah Brooks yesterday said she was "sickened" by allegations that a private eye hired by the paper hacked tragic Milly Dowler's phone. The News International boss vowed the "strongest possible action" if it was proved rogue operator Glenn Mulcaire had intercepted the 13-year-old's voicemail while she was missing. She branded the claims "almost too horrific to believe" as senior executives at the media company met police conducting a criminal investigation into phone hacking.

Denis MacShane MP says it's a collector's item.

Crispin Blunt, the justice minister, has just told BBC News that Dominic Grieve, the attorney general, will be speaking for the government in the debate this afternoon. He will set out the government's position on the call for an inquiry, Blunt says. But it is difficult for the government to do anything while criminal investigations are ongoing, Blunt adds.

Here are what the papers are saying about the phone hacking affair in their editorial columns today.

• The Times (paywall) says that it has decided to break its silence on the phone hacking scandal engulfing its sister paper, the News of the World. It says there is "much we still need to know" about the precise exten of phone hacking. But it says this is a watershed moment for British journalism.

There is no doubt but that journalists are now in their version of the MPs' expenses scandal. If there is proven to be truth in the allegations that journalists on the News of the World hacked into the voicemail of the murdered schoolgirl Milly Dowler, there will not be a journalist in the country who, after the warranted anger, will not feel shamed and depressed. There is a lot that is not yet known about this case but this much we do know: this is beyond reprehensible ... We will, no doubt, learn more, and none of it is likely to be edifying. Whatever else emerges, this is a watershed moment for British journalism. What happened needs to be investigated and, in the public interest and the interests of journalism itself, brought to light. It ought to go without saying that nothing of this nature can ever happen again. But then it ought to have gone without saying that nothing of this nature could ever have happened in the first place. This is why it is so important that the truth be known.

• The Financial Times (subscription) says Rebekah Brooks should go.

Mr Murdoch must set aside personal loyalties and remove those executives with any involvement in the affair – whether through their role as editors or at a corporate level. That includes those responsible for handling the company's response. For a start, Rebekah Brooks, the chief executive of News Corp's UK operations, should go. Assuming the allegations are correct, as the editor of the News of the World when Ms Dowler's phone was hacked, her position is untenable. Although she has pleaded ignorance, the final responsibility was hers.

• The Independent also says Brooks should go.

The alleged hacking of the Dowler phones took place when Rebekah Brooks was editor of the News of the World. Ms Brooks has since been promoted by Rupert Murdoch to chief executive of News International. Andy Coulson resigned as editor of the same newspaper in 2007 when a journalist he employed was convicted of hacking Prince William's voice messages. It is therefore hard to see how Ms Brooks can remain in her present position, even if it is true that she was unaware of the hacking of the Dowler phones (as she claimed yesterday) when she was editor.

• The Guardian says Jeremy Hunt should suspend his decision about whether to allow News Corporation to buy BSkyB.

The problem is that a significant majority of people in this country are opposed to the merger: it simply doesn't pass the commonsense "bad smell" test. So Mr Hunt should simply put the decision on ice. He should say that it is inconceivable that he should currently approve the creation of a giant media entity in this country while there are so many unanswered questions about the criminal behaviour of its employees and about the governance of the company. The people at the head of News International are the same people who paid hush money to conceal evidence of criminality within their own company and who led a news organisation which – according to the PCC chair, Peta Buscombe – lied to the regulator.

• The Daily Mirror says that the News Corporation takeover of BSkyB should be put on hold. It criticises David Cameron and Ed Miliband for being too close to Murdoch.

[Cameron's] close ties to News International at the very highest level are well documented and that cosy relationship undoubtedly smoothed a path for the controversial takeover. Equally, how can Ed Miliband, the Leader of the Labour Party, describing the behaviour as "immoral" and "sick", try to nudge News International chief executive Rebekah Brooks towards the exit door, then pretend its grotesque actions should have no bearing over it controlling what we watch on TV ... To enhance the power and influence over our lives of a company at the heart of a remarkable storm – particularly when further incredible revelations await – would be wrong, illogical and contrary to the public interest At the very least the deal must be put on ice – and should weak Ministers bleat they're impotent, then they should rush legislation through Parliament to acquire powers to do the right thing.

• The Daily Mail says the affair reflects badly on the police, David Cameron, the Press Complaints Commission and Jeremy Hunt.

The police, sadly, come out of this terribly. Afraid of upsetting a powerful newspaper group, which employed several ex-senior officers as writers, they botched their first hacking investigation and cursorily refused a second one when further evidence was produced ... This is the same David Cameron who, of course, in a disastrous misjudgment, made the disgraced NotW editor Andy Coulson his press officer.



And then there is the newspaper industry itself. That the Press Complaints Commission has been dilatory is now all too painfully apparent. Bereft of any investigatory powers, it accepted — perhaps naively — News International's lies and, together with the newspaper industry, must learn huge lessons ... And finally we come to the sorry figure of Culture Secretary Jeremy Hunt, the man who, in a decision that will shame him and the Tory Party for years, refused to refer News International's hugely contentious takeover of BskyB to the Competition Commission. How sick that now looks.

There are no editorials on the subject in the Daily Telegraph, the Sun and the Daily Express.

My colleague Nick Davies, who has led the Guardian's phone hacking investigation, has produced a comprehensive list on our data blog of all the people we now know to have been targeted by the News of the World.

Anyone who watches cop programmes knows that when gang solidarity starts to break down, the police are almost home and dry. That's what's so interesting about the Times story focusing on Andy Coulson and News of the World payments to police. (See 9.00am.) The Telegraph's Benedict Brogan has got a nice take on this on his daily email morning briefing.

The problem with a strategy of throwing former colleagues to the wolves is that you soon run out of colleagues. And it might encourage them to say more than they might have otherwise. The buck hasn't stopped yet, it's still moving. All those politicians who invested themselves personally in the NI combine must be feeling queasy this morning.

The BBC believes that News International now know who commissioned Glenn Mulcaire to target Milly Dowler's phone, according to a tweet from Tweetminster.

Talking of Glenn Mulcaire, BBC News have just broadcast a doorstep interview with him this morning. It must be the worst doorstep I've ever seen. This is all Mulcaire said.

I made a statement yesterday and due to legal constraints unfortunately at this stage I can make no more comment. Thank you very much.

Never mind. In case you missed it, here's the statement he put out yesterday.



I want to apologise to anybody who was hurt or upset by what I have done. I've been to court. I've pleaded guilty. And I've gone to prison and been punished. I still face the possibility of further criminal prosecution. Working for the News of the World was never easy. There was relentless pressure. There was a constant demand for results. I knew what we did pushed the limits ethically. But, at the time, I didn't understand that I had broken the law at all.

The Tweetminster post I mentioned at 10.49am was a reference to a post that has just gone up on Nick Robinson's blog.



News International executives believe that they have uncovered evidence of who at the News of the World commissioned and sanctioned the hacking of Milly Dowler's phone. The evidence is said to have emerged in a document trawl carried out in the immediate aftermath of the revelation by the Guardian of the hacking of the murdered girl's phone. I am told that the evidential jigsaw is not yet complete but executives believe they know who was responsible.

Robinson says the new evidence does not contradict Rebekah Brooks's statement yesterday that it was "inconceivable" that she know about what was going on.

Melissa Harrison has written a piece for Comment is free about how she launched a Twitter campaign to encourage people to urge firms to pull their advertising from the News of the World.

And while we're on the subject of campaigns, it's worth mentioning the Media Standards Trust, who have launched a petition calling for a public inquiry into the phone hacking affair.

There is also a call for an anti-Murdoch demonstration at Westminster at 1pm.

The broadcasters are reporting that Sue Akers, the Metropolitan police officer in charge of the phone hacking inquiry, will give evidence to the Commons home affairs committee next week. Actually, Keith Vaz, the committee chairman, announced this yesterday. Andy Hayman and Peter Clarke, the two officers in charge of the original investigation, will also be appearing. The session will start at 12pm on Tuesday.

PMQs is coming soon. First, here's a mid-morning summary.

• Simon Greenberg, News International's director of corporate affairs, has said that the company is "close" to finding out who authorised Glenn Mulcaire to target Milly Dowler's phone. According to PoliticsHome, Greenberg said on Radio 5 Live that it was "clear" that Rebekah Brooks did not sanction this. The BBC's Nick Robinson has posted more on this on his blog.

• Halifax has pulled adverstising from the News of the World. "In recognising and responding to consumer reaction, Halifax has cancelled an advertisement in this Sunday's News of the World," a spokesowoman said. "This was a tactical decision in the short term whilst we carefully consider our longer term position and its implications." Other firms, including Renault and Mumsnet, are considering doing the same.

• Andy Coulson, David Cameron's former communications chief, has become a central focus the News of the World controversy. This follows the company's decision to reveal that it has found emails that appear to show that Coulson authorised payments to the police. The Times - a News International paper that has until now had tended not to report the story prominently - put this on its front page today. This has prompted speculation about whether News International is sacrificing Coulson to put protect Rebekah Brooks. (See 9.00am, 9.13am and 10.35am.)

• Downing Street has said that it welcomes the fact that MPs will debate calls for a public inquiry into the affair this afternoon. But MPs will not actually get the chance to vote for a public inquiry, and it is not clear yet whether Dominic Grieve, the attorney general, who will be speaking for the government in the debate, will give a commitment to set one up.

• Downing Street has said that David Cameron "stands by" the statement he made about Coulson when Coulson quit his Number 10 job in January. At the time Cameron said Coulson could be "extremely proud" of what he had done for Cameron.

According to colleagues, Lloyds are also pulling advertising from this week's News of the World.

PMQs is coming up soon. I'll be focusing on the phone hacking exchanges.

The Tory MP David Davis, the former Conservative cabinet minister Lord Fowler and Alastair Campbell have all just told the Daily Politics show that they think News Corporation's bid for BSkyB should be put on hold.

I've just received this statement from Sir Paul Stephenson, the Metropolitan police commissioner



In view of the widespread media coverage and public interest, I am taking the unusual step of issuing this statement. As you know Operation WEETING - the investigation into phone hacking -commenced on 26 January. I can confirm that on 20 June 2011 the MPS washanded a number of documents by News International, through theirbarrister, Lord Macdonald QC. Our initial assessment shows that these documents include information relating to alleged inappropriate payments to a small number of MPS officers. Discussions were held with the Independent Police Complaints Commission (IPCC) at the time and they are content that this matter should continue to be investigated through Operation ELVEDEN under the direction of DAC Sue Akers, in partnership with our Directorate of Professional Standards. At this time we have not seen any evidence requiring a referral to the Metropolitan Police Authority (MPA) in respect of any senior officer. Whilst I am deeply concerned by recent developments surrounding phone hacking they are a product of the meticulous and thorough work of Operation WEETING, which will continue. Operation ELVEDEN will be equally thorough and robust. Anyone identified of wrongdoing can expect the full weight of disciplinary measures and if appropriate action through the criminal courts.





• The Metropolitan police admits a "small number" of officers seem to have taken money from the News of the World. But senior officers were not involved, it says.

Cameron is taking questions now. The first two have been about banks and international aid.

Ed Miliband says the whole country has been appalled by the disclosures about phone hacking. The idea that anyone could hack into Milly Dowler's phone is "immoral and a disgrace". Will Cameron support the call for a full inquiry to take place, as soon as practical.

Yes, says Cameron.



• Government agrees to hold an inquiry.

Cameron says there may be a need for more than one inquiry.

There is a major police investigation underway, he says. It does not involve police officers from the original investigation "that so clearly did not get to the truth".

We need to find out why the original inquiry did not get to the bottom of what happened, he says.

There also needs to be an inquiry into the media.

It may be possible to start some of this before the police inquiry is over.

Cameron says he is willing to discuss this with Miliband and other party leaders.

Miliband says Cameron should appoint a senior figure, potentially an judge, to lead an inquiry. It should have the power to take evidence on oath. And it should cover the police, as well as the media.

Cameron says he does not want to jeopardise the police investigation. But it may be possible to make a start on some aspects. Sometimes inquiries are set out too quickly, he says.

Miliband says it is important that work starts now. Cameron launched the Gibson inquiry into collusion in torture even though criminal cases were pending.

Miliband turns to the BSkyB bid. The public will react "with disbelief" if this deal goes ahead when News International is the subject of a major criminal investigation.

Cameron says that although the Gibson inquiry has been set up, it has not started work. "But, believe me, I want us to get on with this issue," he says.

On BSkyB, he says the government has followed the correct legal processes. Jeremy Hunt his handling the matter in a quasi-judicial role. Only yesterday Miliband himself said that plurality issues were separate from News International ethics.

Miliband says Cameron's answer was "out of touch" with public opinon. Will Cameron think again? This would provide "breathing space".

Cameron says the government has been through the proper processes. One is an issue about ethics. Another is an issue about plurality. That's what Miliaband said yesterday. But within 24 hours he has done a U-turn "just to look good in the House of Commons".

Miliband says that instead of engaging in technicalities, Cameron should "speak for the country".

These were not the actions of a rogue individual, Miliband says. The public see a major news organisation where no one is prepared to take responsibility for what happened. Will Cameron join Miliband in saying Rebekah Brooks should take responsibility and consider her position.

Cameron says that, when dealing with the law, government have to follow the technicalities.

On Brooks, he says everyone at News International should take responsibility. The police should be allowed to get on with their work.

Miliband says he cannot tell from Cameron's answer whether he thinks Brooks should go. Cameron has not shown the leadership necessary. If the public want to have confidence in him, he has to accept that he made a "catastrophic error of judgment" by taking Andy Coulson into the heart of his regime.

Cameron says he takes full responsibility for everyone he employs. He feels "so appalled" by what happened. There must be a full police investigation. There must be inquiries to get to the bottom of what happened.

Here are the key points.

• Cameron confirmed that there will be an inquiry into the phone hacking affair. In fact, he suggested that there should be at least two inquiries - one covering the media, and one covering the failure of the police to investigate this matter properly. He also said that he wanted some of this work to start soon, although he also stressed that the phone hacking inquiry could not take place whilst the police were carrying out their criminal investigation.

• Cameron signalled that News Corporation's takeover of BSkyB will be allowed to go ahead. He rejected Ed Miliband's call for the matter to be referred to the Competition Commission. This would be illegal, he suggested.

• Miliband said Cameron made a "catastrophic error of judgment" when he hired Andy Coulson. Miliband also accused Cameron of being out of touch with public opinion on the issue of BSkyB.

I'll post the quotes in full shortly.

Here is more detail on what David Cameron and Ed Miliband had to say, including the key quotes.



• Cameron announced that there would be at least one inquiry into phone hacking.

Yes, we do need to have an inquiry, possibly inquiries into what has happened. Let us be clear, we are no longer talking here about politicians and celebrities, we are talking about murder victims, potentially terrorist victims having their phones hacked into. It is absolutely disgusting what has taken place.

Cameron said that there were two issues that needed to be investigated: the failure of the original police inquiry into phone hacking; and the behaviour of individual journalists and news organisations as well as media ethics generally. Cameron said that it would not be possible to conduct an inquiry into the flaws in the original policy investigation now because of the ongoing investigation. But he said it might be possible to make a start on an inquiry into "other elements" [ie, the media generally] now.

• He offered to discuss the nature of an inquiry with Ed Miliband, other party leaders, the attorney general and the cabinet secretary.

• Cameron said that the current police inquiry into phone hacking was "one of the biggest police investigations currently underway in our country". He also stressed that it did not involve any of the officers from the original inquiry.

• He criticised the original police inquiry into phone hacking because it "so clearly didn't get to the truth".

• He signalled that News Corporation's takeover of BSkyB will be allowed to go ahead. Ed Miliband said it should be referred to the Competition Commission. Cameron rejected this.

What we have done here is follow absolutely to the letter the correct legal processes. That is what the govenrment has to do. [Jeremy Hunt] is in a quasi-judicial role.

Cameron also said that Miliband himself said yesterday that the issue of media plurality (which is what Hunt has to consider when deciding whether to approve the BSkyB bid) was separate from the media ethics issue. Miliband responded by saying: "This is not the time for technicalities." Cameron said that when you are dealing with the law, you have to consider technicalities.

• Cameron refused to say whether he thought Rebekah Brooks should resign. Miliband said he thought she should "consider her position". But when he asked Cameron if he agreed, Cameron replied:

Everyone at News International has got to ask themselves some pretty searching questions.

Miliband said - fairly, I think - that it was impossible to tell from that whether Cameron did or did not think Brooks should go.

• Miliband accused Cameron of failing to show "leadership" on this issue.

[Cameron] hasn't shown the leadership necessary on BSkyB. He hasn't shown the leadership necessary on News International. And isn't the case, if the public is to have confidence in him, he's got to [do] the thing that is most difficult. He's got to accept that he made a catastrophic error of judgment by bringing Andy Coulson into the heart of his Downing Street machine.

My colleague Mark Sweney is about to post a story about the advertising backlash against the News of the World. Here's an extract.

Procter & Gamble, the UK's largest advertiser and home to household brands including Gillette, Fairy and Pampers, is to review its relationship with the News of the World as a host of big name brands threaten an advertising exodus from this weekend's edition over the latest phone hacking allegations. Other companies voicing concern about the phone hacking revelations and reviewing whether to pull advertising from the News International tabloid include mobile company 3, Halifax, Tesco, T-Mobile, Orange, Vodafone, 02, Coca-Cola GB, Sainsbury's and Asda. P&G, which last year spent £204m on marketing in the UK and is the third-largest advertiser in the NoW, spending almost £1.5m annually, said that it shared the "growing concern" the public and politicians have voiced over a new wave of phone-hacking allegations this week. "We are very aware of the situation and share the growing concern amongst the public," said a spokeswoman for the company. "We are monitoring it closely and will be reviewing our options."

According to Inversnaid in the comments, the Co-operative Group have pulled advertising from the News of the World.

My colleague Jason Deans tells me that Halifax, the Co-op, Virgin Holidays and Vauxhall have now all pulled advertising from this weekend's News of the World.

If you want to listen to PMQs, here's our audio of the exchanges.

Here's a lunchtime summary.

• David Cameron has announced that there will be at least one inquiry into phone hacking. There has to be an investigation into why the original police inquiry failed, he said. This won't start until the current police inquiry is over. But there would also have to be a general inquiry into the behaviour of the media, he said, and some elements of this could start straight away.

• Ed Miliband has urged the government to hold up News Corporation's bid for BSkyB. Jeremy Hunt, the culture secretary, is expected to approve the deal before the end of this month. But at PMQS Miliband said this should be put on hold: "The public will not accept the idea that, with this scandal engulfing the News of the World and News International, that the government should in the coming days be making a decision outside of the normal processes for them to take control of one of the biggest media organisations in the country." This marks a U-turn for Miliband, who only yesterday was saying that the BSkyB takeover was a separate issue. But Miliband's performance at PMQs is getting rave reviews on Twitter. It is probably about the boldest stance any Labour leader has against Rupert Murdoch since 1994.



• The Metropolitan police have confirmed that a "small number" of officers seem to have taken money from the News of the World. Sir Paul Stephenson, the Metropolitan police commissioner, announced this in a statement shortly before PMQs started. But he also said senior officers were not implicated. (See 11.58am.)



• More companies have joined the advertising boycott of News of the World. Halifax, Co-op, Vauxhall and Virgin Hollidays have joined Ford in pulling ads from this weekend's edition, my colleague Mark Sweney reports.

The phone hacking debate is about to start.

John Bercow says there will be a seven-minute time limit on backbench speeches because so many people want to speak.

Chris Byrant (left) is opening the debate now. He says that tomorrow will be the anniversary of 7/7. The police are investigating whether relatives of the 7/7 victims had their phones hacked. Other relatives of crime victims have had their phones hacked.

"Scandalously", the phones of officers investigating the News of the World have been hacked too.

The News of the World had lost sight of all decency, he says. The vast majority of journalists would be horrified by what happened.

The journalists and private investigators should be ashamed of what happened. But those in charge were responsible. If Rebekah Brooks had "a single shred of decency" she would resign. If a minister were involved, she would be demanding his resignation.

But the News of the World was not the only paper involved in dirty tricks, he says. Bryant mentions What Price Privacy Now? (pdf), the information commissioner's investigation into the use of private detectives by the papers to obtain information unlawfully. As a Labour supporter, Bryant says, he is ashamed to say that even the Daily Mirror was involved.

Bryant is still speaking. He says a lot of lies have been told. What hangs around "is a very dirty smell". People need to be able to trust the police.

Did the close relationship between the Metropolitan police and News International have anything to do with the fact that the first inquiry into phone hacking, he says. We know for a fact that Andy Hayman, who led the original inquiry, now works for News International.

Bryant recalls how Rebekah Brooks told him in a committee in 2003 that her paper had paid police officers. And he reads out the letter she sent to the home affairs committee about this recently saying that she was not talking about specific incidents. This is the News International equivalent of "yeh but, no but", he says.

Bryant says he is worried that evidence about the failure of the police investigation could be shredded. That's why it is important for an inquiry to start now. It does not have to take evidence in public while the criminal investigation is still ongoing.

David Cameron asked Sir Peter Gibson to hold an inquiry into British collusion in torture last year, even though criminal proceedings were still active. Bryant says the Gibson inquiry has started work.

Jack Straw intervenes to say that he knows Gibson has done "a huge amount of work" in private already.

Dominic Grieve, the attorney general, says he agrees that an inquiry could be set up now. But it would be extremely difficult for it to take evidence while criminal investigations are still going ahead. Bryant says this is a "big concession".

Bryant is still speaking. Sir Menzies Campbell says that, if an inquiry were to start taking evidence before criminal proceedings were over, any witnesses would be entitled to be represented by a lawyer, and the lawyer could tell them not to respond in case they incriminated themselves.

Bryant says parliament came into existence to hold the Crown to account. Now it must hold other powers to account. Politicians have colluded "for far too long" with the media. "

Sometimes that means we are not courageous or spineful enough to stand up when wrong has occurred ... We have let one man have far to much sway over our national life. At least Berlusconi lives in Italy.

Rupert Murdoch does not even live here or pay taxes here. Yet he is allowed to own four newspapers. America does not allow this. We shouldn't either, Bryant says.

Bryant says we don't know who is paying Glenn Mulcaire's legal fees. And it is not clear whether Clive Goodman received a pay-off from the News of the World.

Bryant says he hopes the British media will rediscover their vocation "to bring the truth to light, truthfully, honestly, and legally".

Dominic Grieve (left), the attorney general, is speaking now. He congratulates Bryant on raising the issue. Many people will agree with him, he says.

The suggestion that Milly Dowler's phone was hacked must fill people with revulsion, he says.

Grieve says there is a limit to what he can say because criminal investigations are underway.

Much of the work of the inquiry announced by David Cameron will only be able to start after the criminal proceedings have finished.

In the meantime, the government will "seek to do all it can to progress matters further". It will consult on the terms of reference and on whether to have one inquiry, or more than one.

Grieve is still speaking. Hazel Blears intervenes. She says we now have the News of the World investigating the News of the World, and the Met investigating the Met. She says Met officers may have to be investigating people they know.

Grieve says the Met have experience of dealing with dilemmas of this kind.

Kevin Brennan, a Labour MP, asks Grieve if Jeremy Hunt has the power to refer the BSkyB takeover to the Competition Commission.

Grieve says Hunt did refer the matter to the Competition Commission. After he did so, a series of assurances were given by News International, Grieve says.

Jack Straw says Hunt has new information about News Corporation that he could not have had when he made his original decision. Given that, as a matter of law, it must be open to Hunt to reconsider.

Grieve says Hunt is in the chamber and will respond if he wants. Hunt has said he is "minded" to accept News International's assurances.

Nicholas Soames, a Conservative, says there is serious evidence of criminality at News International. Will Hunt consider a "pause" in the takeover?

Grieve says Hunt will reflect carefully on this. (He did not say it in such a way as to suggest there is any chance of Hunt changing his mind.)

Sir Menzies Campbell suggests the government has discretion to manage this industry. Can't it take into account the behaviour of directors?

Grieve says that's correct.

(This seems to be an important concession. Grieve seems to be saying the government could block the BSkyB bid. I'll post the quote in full soon.)

Grieve is still speaking. Labour's Frank Dobson asks Grieve to confirm that, with News International's record, if they were to apply to run a minicab firm in London, they would not get a licence. If they are not allowed to run a minicab firm, why should they be allowed to run BSkyB.

Grieve says that, under the Broadcasting Act, it is up to Ofcom to decide if people are fit to run a broadcasting operation.

Chris Bryant says Grieve is right to say that Ofcom must decide if a firm is fit to run BSkyB. But Ofcom will not have a chance to do this unless Jeremy Hunt orders a pause.

Grieve says he thinks Ofcom can intervene at any stage. But he is not sure - he will have to check this.

John Whittingdale, the chair of the Commons culture committee, says he spoke to Ofcom yesterday. They confirmed that they could intervene at any time.

Grieve is still speaking. Labour's David Hanson says he has been told that Lord Macdonald, the former director of public prosecutions, has been appointed to advise News International about its dealings with the police.

Grieve says he thinks Macdonald is helping News International with its disclosure process.

Hanson says he is concerned because, when he was police minister, Macdonald briefed him about the News International investigation. He suggests there could be a conflict of interest.

Grieve says that lawyers have to follow a professional code of inquiry. But he says he will look into this.

Ofcom has put out a statement on its website about its ability to intervene in the BSkyB takeover. Here it is.



In the light of the current public debate about phone hacking and other allegations, Ofcom confirms that it has a duty to be satisfied on an ongoing basis that the holder of a broadcasting licence is 'fit and proper'. It is clearly not for Ofcom to investigate matters which properly lie in the hands of the police and the courts, however we are closely monitoring the situation and in particular the investigations by the relevant authorities into the alleged unlawful activities.





• Ofcom confirms that it has the power to stop News Corporation running BSkyB. It also says it is "closely monitoring" the News of the World investigation.

Grieve has finished now. Here is the key exchange between him and Sir Menzies Campbell. (See 2.09pm.)

Campbell: I believe he is right when he, as so far he has done, confines the argument [about the BSkyB] to the question of competition. But does not the government, as the overall regulating authority, retain a discretion in relation to the management of this industry throughout the United Kingdom? And does not that discretion, for example, allow the government to give consideration as to whether the directors of any company have been fulfilling their public obligations?

Grieve: I have no doubt at all that my right honourable friend is correct in what he says. Those are matters that can be borne in mind by the government in reviewing the process of this takeover bid and indeed the competition laws underlying it. There's no doubt that he's correct.

• Grieve suggests that the government does have the power to block the BSkyB takeover on public interest grounds. This undermines the case put at PMQs by David Cameron, who argued that media plurality was the key issue in the takeover, that these "technicalities" mattered and that "if you don't follow the correct legal processes you will be judicially reviewed and all the decisions you would like to make from a political point of view will be struck down in the courts".

According to Guido Fawkes, Rebekah Brooks has pulled out of the Sun's 2011 police bravery awards ceremony taking place tomorrow.

Yvette Cooper, the shadow home secretary, has just finished her speech in the debate. She said that David Cameron should consider stepping aside from any further decisions about the phone hacking inquiry because it would cover his close associate Andy Coulson. She also asked whether Coulson's decision to resign in January had anything to do with him learning that emails existed apparently showing that he authorised payments to the police.

Labour's Tom Watson is speaking in the debate now. He says that Rebekah Brooks was editing the News of the World carried a story that explicitly referred to a message left on Milly Dowler's phone. The idea that she was far removed from this was "simply not believable".

Watson mentions further evidence of Brooks knowing about phone hacking. I will post his comments in full shortly.

He says he is going to reveal more information about the News of the World later this week. He says he now thinks that the conviction of Tommy Sheridan for perjury is "unsound".

James Murdoch should stand aside, Watson says.

Watson also says that James Murdoch and Brooks need to say what they know about the attempted destruction of material [relating to News of the World emails, I think] at the HCL storage depot in India.

News Corporation shares have been falling in the light of today's controversy. My colleague Graeme Wearden has sent me the details.

Shares in both News Corporation and BSkyB have fallen on Wednesday as the News of the World phone hacking scandal put Rupert Murdoch's bid to take control of the satellite broadcaster under fresh scrutiny. News Corp shares fell by 3.3% in early trading on Wall Street to $17.56, as US investors reacted to the latest developments on across the Atlantic. BSkyB shares are trading as low as 818p in London, a fall of over 3% or 27p. BSkyB shares came under pressure after Labour leader Ed Miliband called during prime minister's questions in the Commons for News Corporation's takeover offer to be referred to the Competition Commission, a move that could potentially thwart Murdoch's ambitions. BSkyB shares had previously been changing hands for 850p on Monday afternoon, before the Guardian revealed that missing schoolgirl Milly Dowler's voicemail had been hacked by News of the World journalists. Traders in the City believe that Murdoch's bid to buy the 61% of Sky not already owned by News Corp will probably still succeed, but are also aware of the possibility of further evidence emerging.

Simon Hughes, the Lib Dem deputy leader, has has just said the government should formally ask Ofcom to consider whether News Corporation are "fit and proper" people to run BSkyB. He said that, as the MP for the constituency where Ofcom are based, he would be asking him themselves to make this assessment.

News International has put out a statement welcoming David Cameron's decision to hold an inquiry.



We also welcome today's cross-party calls for a broad public inquiry into standards and practices in the industry.

The company has also confirmed that Lord Macdonald, the former director of public prosecutions, will be working for it. And it has responded to the Met's statement about the evidence about police officers being paid. (See 11.58am.) Here is the statement covering these matters.

News International notes that the Metropolitan Police Service (MPS) has opened a new investigation into police payments.

Lord Macdonald QC, the highly regarded former director of public prosecutions, has been appointed by the News Corporation board to advise News International (NI) on the extensive cooperation it is providing to the MPS regarding any inquiries into police payments at the News of the World.

The appointment, which was made in May, is one of a series of measures to address these issues since January 2011, when information was voluntarily disclosed by News International that reopened the investigation into illegal voicemail interception known as Operation Weeting.

NI cannot comment on the detail of the information voluntarily disclosed on June 20 because we do not want to prejudice any ongoing inquiries.

But the fact that these developments came as a result of voluntary disclosure demonstrates not only full cooperation with the MPS but also NI's determination as a company to deal responsibly and correctly with the issues that have arisen.

Here are more extracts from Tom Watson's speech.

I want to inform the House of further evidence that suggests Rebekah Brooks knew about the unlawful tactics of News of the World as early as 2002, despite all her denials yesterday. Rebekah Brooks was present at a meeting with Scotland Yard when police officers pursing a murder investigation provided her with evidence that her newspaper was interfering with the pursuit of justice. They gave her the name of another executive at News International, Alex Marunchak. The meeting, which included Dick Fedorcio of the Metropolitan police, told her that News of the World staff were guilty of interference and party to using unlawful means to attempt to discredit a police officer and his wife. She was told of actions by people she paid to expose and discredit David Cook and his wife Jackie Haines so that Mr Cook would be prevented from completing an investigation into a murder. News International were paying people to interfer with police officers and were doing so on behalf of known criminals. We know now that News International had entered the criminal underworld. She cannot deny being present at this meeting when the actions of people she was paying were exposed. She cannot deny now being warned that under her auspices unlawful tactics were being used with the purpose of interfering with the pursuit of justice. She cannot deny that one of her staff, Alex Marunchak, was named and involved. She cannot deny either that she was told by the police that her own paper was using unlawful tactics, in this case to help one of her law-breaking investigators. This in my views shows her culpability goes beyond taking the blame as head of the organisation. It is about direct knowledge of unlawful behaviour. And was Mr Marunchak dismissed. No. He was promoted.

Have you heard News International's latest defence? Rebekah Brooks was on holiday at the time that Milly Dowler's phone was hacked. My colleague James Robinson has all the details.

My colleague colleague Dan Sabbagh has sent me a note about what's been going on in the News of the World newsroom this afternoon.

Colin Myler has just addressed staff and section heads in the NOTW newsroom. Presume he didn't send an email as didn't want it leaked. My newsroom snout was there. Apparently it was sombre an emotional. Note where he places the blame!

Myler said: "Like the rest of you I was appalled by these allegations. There is a great deal of anger directed towards this newspaper for past actions under a different regime.

"If these allegations are proved they would amount to the most devastating breach of journalistic ethics imaginable.

"These allegations about the NotW are shocking, but they it is not the same newspaper that all of you, my colleagues, recognise today.

"There is an extremely painful period ahead for you all while we get to the bottom of these issues and atone for the wrongs of our predecessors."

Here are more extracts from Tom Watson's speech.

The whole board of News International is responsible for this company. I believe Mr James Murdoch should be suspended from office while the police now investigate what I believe is his personal authorisation of the cover-up of this scandal. Mr James Murdoch is the chairman. It is clear now that he personally and without board approval authorised money to be paid by his company to silence people who have been hacked and to cover up criminal behaviour within his organisation. This is nothing short of an attempt to pervert the course of justice.

• Labour MP Tom Watson accuses James Murdoch of being engaged in an attempt to pervert the course of justice and urges the police to investigate.

Twitter does speed things up. After reading my tweet about Dominic Grieve saying that the governement does have the power to block the BSkyB takeover on public interest grounds (see 2.36pm), a government source called to say that Grieve was "not quite up to speed" on how the process actually works. Vince Cable originally referred the matter to Ofcom on media plurality grounds, she said. Ever since then, Jeremy Hunt (who took over responsibility for this from Cable) has had to apply a media plurality test. Grieve implied that the government could consider wider public interest issues. But the source insisted that this was not the case. Media plurality is the only test that counts, the source said.

The anti-Murdoch backlash is real. Giles Coren has just put a post on Twitter saying that someone has been rude to him in the butcher's because he writes for the Times.

Rupert Murdoch has just issued a statement about the phone hacking affair. Here it is in full.



Recent allegations of phone hacking and making payments to police with respect to the News of the World are deplorable and unacceptable. I have made clear that our company must fully and proactively co-operate with the police in all investigations and that is exactly what News International has been doing and will continue to do under Rebekah Brooks' leadership. We are committed to addressing these issues fully and have taken a number of important steps to prevent them from happening again. I have also appointed Joel Klein to provide important oversight and guidance and Joel and Viet Dinh, an independent director, are keeping News Corporation's board fully advised as well.

• Rupert Murdoch backs Rebekah Brooks and says that she will continue to run News International.

The debate has now wound up. Here are some comments from speakers that I have not already mentioned. I've taken the quotes from the Press Association and PoliticsHome.

Alan Johnson, the Labour former home secretary, criticised the original police investigation into the phone hacking affair.



I have huge regard for the Metropolitan Police, I have huge regard for the work they do. Were they being evasive, were they being dishonest, were they being lethargic? I think it's one of those three. I think there was a certain lethargy that, with so much else going on, we've got two people banged up, do we need to go any further in to this?

Labour's Alun Michael said the Press Complaints Commission needed to be replaced.



The PCC is well meaning, but frankly it's a joke, the public deserve better and the journalists deserve better. The PCC clearly has neither the will nor the ability to change things. What we need is an independent body, [one that is] robust and effective, and has the powers to investigate. That would be a major step forward.

Zac Goldsmith, a Conservative, said the Murdoch empire had become too powerful.

We have seen, I would say, systemic abuse of almost unprecedented power. There is nothing noble in what these newspapers have been doing. Rupert Murdoch is clearly a very, very talented businessman, he's possibly even a genius, but his organisation has grown too powerful and has abused that power. It has systematically corrupted the police and in my view has gelded this Parliament to our shame.

Labour's Paul Farrelly said Rebekah Brooks's position was now "untenable".

Anna Soubry, a Conservative, said that the government should delay allowing the BSkyB deal to go ahead.

I urge the government to look at whether we should pause things given what has come to light.

Damian Green, the Home Office minister, wound up the debate for the government. He praised the bravery of those MPs who have been willing to campaign against phone hacking. But also said the police investigation could lead to further arrests.



It is entirely possible that there will be further arrests and potentially further prosecutions. The [director of public prosecutions] has announced that the Crown Prosecution Service will examine any evidence resulting from the Met investigation and has asked Alison Levitt QC, who has no previous involvement in the case, to take a robust approach in deciding whether any prosecutions can be brought.

Labour's Clive Efford praised Ford for withdrawing advertising from News of the World.

"Who are these people who believe they can trample over the lives of ordinary people, and use them for their own ends?"

Downing Street said this afternoon that there would have be to "substantial allegations" for Ofcom to decide that News Corporation could not run BSkyB. This is from the prime minister's spokesman.

[Ofcom] have said that if there is a change, so if there is a change in ownership for example, that might be one thing that would make them consider whether or not people were fit and proper to hold that licence. If there were substantiated allegations, that might be something that they would consider. Those issues are all things for Ofcom as an independent regulator

.

More on the "Rebekah Brooks was on holiday" line coming out of Wapping. My colleague Ian Katz says that this is largely irrelevant because, according to one of his sources, Brooks invariably got her office to fax her proofs of the paper when she was away.

Our Comment is free panel have given their verdicts on the News of the World phone hacking debate. Roy Greenslade, Jackie Ashley, Douglas Murray and Julian Glover have all contributed.

Here's an evening summary.

• Rupert Murdoch has said that Rebekah Brooks will stay as chief executive of News International. In a statement, he said that she will be in charge of the company's efforts to restore its reputation. Given that the statement arrived as MPs were finishing a debate on the News of the World, and that half Britain's MPs are calling for her to go while the other half (typified by David Cameron) are sitting on the fence, the statement could be interpreted as a massive two fingers to the British political establishment. But he also hints that he does not have full confidence in the News International operation, because he stresses that he has bought in some heavy-hitters from New York to oversee the clean-up process. (See 4.45pm.)

• Government officials are playing down any prospect of the phone hacking affair stopping News Corporation being allowed to take over BSkyB. Ofcom has confirmed that, in theory, it could stop News Corp owning the broadcaster. And in the Commons Dominic Grieve, the attorney general, suggested that ministers did have discretion to block the bid. But government sources have challenged Grieve's interpretation of the rules and played down the prospects of an Ofcom intervention. For Murdoch, BSkyB is the real prize. The profits from BSkyB will dwarf anything he will ever earn from News of the World. If Rebekah Brooks's behaviour were endangering the prospect of the bid going ahead, one suspects she would be out of the door before you could say Tom Watson. But at this stage it looks as if the deal will go through.



• Labour's Tom Watson has said that the police should investigate James Murdoch for trying to pervert the course of justice. In a powerful speech in the debate, Watson said: "It is clear now that he personally and without board approval authorised money to be paid by his company to silence people who have been hacked and to cover up criminal behaviour within his organisation. This is nothing short of an attempt to pervert the course of justice." Watson also cited evidence that he said showed that Brooks was warned in 2002 that her newspaper was using unlawful tactics. "News International had entered the criminal underworld," he said. (See 3.35pm and 4.06pm.)

• Damian Green, a Home Office minister, has told MPs that the Crown Prosecution Service has been asked to take "a robust approach" to deciding whether to prosecute people in relation to phone hacking. (See 4.52pm.)

• Boris Johnson has said that he wants the Independent Police Complaints Commission to play a role in investigating the Metropolitan police's failure to conduct the first phone hacking inquiry properly. In a statement he said: "If some police officers were indeed paid as part of this process, there is only one word for this, corruption. It doesn't matter that this happened many years ago, under a different commissioner and indeed mayoralty. Even if only a small number of people were implicated, these allegations have to be taken extremely seriously and investigated ruthlessly and openly. I have talked to the commissioner this afternoon and he's equally determined to clear up any doubts on this issue. I've also made it clear to him that for the sake of public confidence this investigation needs independent oversight and the IPCC should play a full role."



• Shares in News Corporation and BSkyB have fallen in the light of the scandal.

That's it from me for today. But my colleagues will be topping up this blog later with any further developments.

Hi this is David Batty and I'll be taking over the live blog for the rest of the evening. You can also follow or contact me on Twitter @david_batty.

The Press Complaints Commissionhas announced it will launch a review of "all aspects of press regulation" in the wake of the latest News of the World phone hacking allegations.

The commission said it accepted it had a responsibility to ensure "events of this sort" never happened again.

To that end, (the PCC) agreed that public members of the commission will lead a review of all aspects of press regulation in its current form, which will be designed to ensure that public confidence is enhanced. "The commission will wish to review its own constitution and funding arrangements, the range of sanctions available to it and its practical independence.

Editorial members of the commission will also be involved in the review but the public members will set the agenda, a spokesman added.

The commission also declared that its members were "unanimous in their condemnation" of the hacking of Milly Dowler's phone.

PCC chairman Peta Buscombe, who has faced considerable criticism for the commission's response to the scandal, signalled the watchdog recognised that reform of press regulation was necessary to restore confidence in British journalistic standards.

We welcome the announcement by the Prime Minister of his proposed inquiries. The PCC is determined to identify necessary reforms that will guarantee public confidence in press regulation. Already, the PCC provides a free public service that helps thousands of people every year. There is currently a major police investigation, which has the necessary powers of investigation and resources to identify the perpetrators of these criminal acts. However, the Commission is determined to play its part in bringing to a conclusion this shocking chapter, which has stained British journalism, and to ensure that good comes out of it.

With reference to the debate in parliament about reform of press regulation, she added:



The status quo is clearly not an option, and we need to identify how the model of an independent PCC can be enhanced best to meet these challenges. Hence the action we have taken today.

Channel 4 News has tweeted they will have more on the story about the Met Police detective who was put under surveillance by the News of the World on their 7pm programme.

Police confirm to #c4news Rebekah Brooks did meet to discuss claims a Met Police detective was put under surveillance by NOTW journalists. Channel 4 News

channel4news

The Guardian's Nick Davies will also be covering the story tonight.

The Press Complaints Commission is "woefully inadequate", according to John Kampfner, chief executive of Index on Censorship:

The UK's regulator, the Press Complaints Commission, has long been considered toothless – in an interview on Tuesday, the best its chairman could offer was a "review" and a yelp that she had been lied to. The PCC insists that the reality is better than the perception, that it has prevented several wrongful acts without fanfare but is not given due credit. Yet any organisation that loses public confidence struggles to restore it without fundamental reform. The PCC, in its present configuration, is woefully inadequate.

If you're interested in joining the debate about media regulation, the Frontline Club is hosting a debate on phone hacking, ethics and tabloid journalism.

The Metropolitan Police has confirmed that Rebekah Brooks met with officers in 2002, when she edited the News of the World, to discuss claims a senior detective was put under surveillance by journalists from her paper, according to Channel 4.

The Guardian's Nick Davies unpicks the details of what Brooks knew in this article. He notes that News of the World's investigator, Glenn Mulcaire, obtained Detective Chief Superintendent David Cook Cook's home address, his internal payroll number at the Metropolitan police, his date of birth and figures for the amount that he and his wife were paying for their mortgage, and his wife's mobile phone number and password. Furthermore, the information "appears to have been blagged by Mulcaire from confidential databases, apparently including the Met's own records."

Davies adds that paperwork in the possession of Scotland Yard's new inquiry into the phone hacking, Operation Weeting, is believed to show that Mulcaire did this on the instructions of Greg Miskiw, the paper's assistant editor and a close friend of one of Brooks' most senior journalists, Alex Marunchak.

Deputy prime minister Nick Clegg has demanded that any inquiry into phone hacking is presided over by a judge - putting him at odds with the prime minister.

In an email to Liberal Democrat MPs, Clegg said he and David Cameron had agreed that there will be inquiries into both the original police phone hacking investigation and also the behaviour of the British press, their practices and ethics, PA reports.

On your behalf I will be making it clear that the inquiries must be independent, open, able to access all information and call witnesses, and that crucially the inquiry dealing with legal issues (eg relationship between police and media) must be presided over by a judge.

But Downing Street sources said it was not necessary for a judge to lead the investigation.

In the most outspoken criticism of the News of the World by one of its major advertisers, car manufacturer Mitsubishi has described the latest allegations about phone hacking by the paper as "unbelievable, unspeakable and despicable".

The company earlier announced it had suspended "all media and advertising spend" with the News of the World, and promised to donate any funds saved to the charity Childline.

Lance Bradley, its managing director, said:

Mitsubishi Motors in the UK considers this type of activity - especially in such a distressing case - to be unbelievable, unspeakable and despicable. It has therefore been necessary for us to pull all of our media advertising with the News of the World with immediate effect and we have pledged to donate the saved funds to the charity Childline.

A statement released by the company said the move affected all online and print advertising with the News of the World. However, it also said the action was confined to the Sunday tabloid and not other News International media because "the News of the World is run as a separate company from News Corporation's other titles".

The information commissioner Christopher Graham has said "unlawful trade in personal data" should carry a custodial sentence.

Graham told Channel 4 News that parliament and the press "can't say they weren't warned" because two reports highlighting the problem were published in 2006.

At the time of the reports were published, 31 titles - newspapers and magazines - and 305 journalists were said to have been involved.

There may be a public interest defence in some of those cases, but I suspect very often not. What's the press done about it? What has Parliament done about it?

In a harsh critique of the phone hacking scandal, Peter Oborne unpicks the extent to which Murdoch's media empire has ensnared and infested the senior ranks of the Tory and Labour parties.

There are those who maintain that David Cameron is little more than a high-grade public relations man. Cameron's long association with the Murdoch empire, dating from his dreadful decision to hire Andy Coulson — a former editor of the News of the World who resigned after a phone-hacking scandal, and now looks to be in even deeper trouble — unfortunately suggests that the prime minister's detractors are on to something. When still leader of the opposition, David Cameron came across the PR fixer Matthew Freud, son-in-law of Murdoch, at Rebekah Brooks's wedding. The two men exchanged an exuberant high-five salute. To this day, the Prime Minister and his wife remain on cheerful social terms with Brooks, who lives barely a mile up the road from the their country home. They have been known to go riding together. All this is too depressing for words.

Oborne's assessment of Ed Miliband is little better, noting how the Labour leader appointed Tom Baldwin, a former News International journalist, as his spin doctor.

Perhaps Baldwin, like his former News International colleagues, doesn't find phone hacking too shocking. Indeed, one of his first actions as Miliband's spin-doctor was to instruct Labour MPs to go easy on the scandal. In a leaked memo, he ordered them not to link it to the impending takeover decision on BSkyB. But this was to let News International crucially off the hook.

Oborne also highlights how those papers most implicated in phone hacking have devoted the least coverage to the scandal.

Murdoch could not have got away with it for so long but for the silence in the British press. Only the Guardian, and belatedly the Independent, have covered the story with flair and integrity.

Scotland Yard has told the chancellor, George Osborne, that his name and home phone number appeared on notes kept by private investigator Glenn Mulcaire and former News of the World reporter Clive Goodman.

A spokesman for the Chancellor added that there was no suggestion his phone had been hacked.

More details on the disclosure that George Osborne's name and home phone number appeared on notes kept by a former News of the World reporter and a private investigator hired by the paper.

Scotland Yard contacted Osborne last week to set up a meeting about the discovery and visited him at his office tonight, PA reports.

A spokesman for Osborne said: "The Metropolitan Police Service (MPS) met with George Osborne this evening to notify him that his name and home phone number appeared on notes kept by Glenn Mulcaire and Clive Goodman. "The MPS had no further evidence to suggest George's voicemail had been hacked or attempted to be hacked. "George was very grateful to the police. Frankly he thinks there are far more serious allegations surrounding the whole hacking affair and fully supports the police in their investigations."

The Guardian has compiled a list of the denials made by News International that its journalists are involved in phone hacking.

Ronan Dunne, chief executive of mobile phone company O2, has announced that the company is suspending advertising with the News of the World in light of the latest phone hacking allegations.

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

More than 107,000 people have signed an online petition in the past 24 hours calling on Jeremy Hunt and David Cameron to deny Rupert Murdoch any further control of British media until there is a full judicial inquiry into the phone hacking scandal.

The Telegraph's lead story tomorrow is that phone numbers of dead serviceman may have been hacked after they were found in the notes of Glenn Mulcaire.

News International has issued a statement saying that it would be "absolutely appalled and horrified" if there was any truth in the allegations that relatives of soldiers killed in Iraq and Afghanistan were victims of News of the World phone hacking.

Relatives of soldiers killed in Iraq and Afghanistan have been informed that they may have had their phones hacked by the News of the World, lawyers have confirmed.

The Ministry of Defence is seeking clarification about the allegations from Scotland Yard. Detectives are contacting the families of dead servicemen over the scandal.

News International said it would be "absolutely appalled and horrified" if there was any truth in the allegations.

MPH Solicitors, whose clients include Samantha Roberts, widow of one of the first Britons killed in Iraq in 2003, said they were contacted earlier today about the possibility of dead servicemen's families being targeted by the News of the World.

"We have been contacted this morning in connection with a possible phone-hacking on our clients, and Geraldine McCool, arising out of high-profile military inquests in 2006/2007," a statement said. We are making efforts to verify this information."

A News International spokesman said: "News International's record as a friend of the armed services and of our servicemen and servicewomen, is impeccable.

"Our titles have campaigned in support of the military over many years and will continue to do so. If these allegations are true we are absolutely appalled and horrified. We will be contacting the MoD immediately to try and verify the situation."

Roberts, from Shipley, West Yorkshire, was accidentally shot dead by one of his own men when UK troops opened fire during a riot near Basra, just three days into the war.

Graham Knight, whose son Ben was killed in the Nimrod explosion in Afghanistan in 2006, said: "It's disgusting but it doesn't surprise me."

An MoD spokesman said: "This is a matter for the Metropolitan Police who are investigating these allegations. It would be inappropriate for us to comment whilst this investigation is ongoing."

Newsnight reports that the Metropolitan Police has identified three or four officers who were paid up to tens of thousands of pounds to supply information to the News of the World.

According to the report, the officers concealed the illegal trade in information by classifying certain journalists as confidential police sources.

Conservative MP Anna Soubry told the programme that she believed the focus of an inquiry should be the relationship between journalists and the police. Referring to Tom Watt's speech in parliament earlier today (see here and here), she says if the Labour MP's allegations are accurate, the implications were "devastating".

"I'm afraid the police are coming out of this very badly. The police should be enforcing the law and they're not because they're being bribed by the press," she added.

Rather more predictably, Soubry defended Cameron's appointment of Coulson, rejecting suggestion that the prime minister had shown poor judgement.

Bill Emmott, a freelance columnist for the Times, told the programme that he was ashamed that Brooks had "not resigned already" over the phone hacking scandal.

Emmott predicted their would be a groundswell of support for statutory regulation of the press because it has "laughed at self-regulation".

The Times' front page story says that five journalists and newspaper executives suspected of involvement in the News of the World phone hacking scandal are expected to be arrested within days.

In case you missed it, here's a link to my colleague Roy Greenslade's deconstruction of Rupert Murdoch's statement earlier today about the phone hacking scandal.

Branding the statement lame and economical with the truth, Greenslade lays into Murdoch for standing by Rebekah Brooks:

So the chairman of a major media corporation, who knows that his papers would have no such truck with any institution that investigated itself over matters of criminality, is happy for Brooks to investigate herself. It is further proof that the old man has lost his marbles. He has allowed himself to be seduced by Brooks's formidable charms. I cannot imagine him doing anything like this when at the height of his powers.

This profile of News International's director of corporate affairs, Simon Greenberg, whose defence of the corporation in the wake of the latest phone hacking allegations has attracted much criticism and mockery, is also worth a read.

How can anyone hack the phone of the family of a man who has died for his country? There are no words to describe this. David Yelland

davidyelland

Former Sun editor David Yelland has expressed his outrage on Twitter over the allegations of phone hacking of the relatives of dead servicemen. Yelland edited the paper from mid-1998 to January 2003.

Conservative MP Patrick Mercer has said the allegations that the relatives of dead servicemen had their phone hacked were "very damaging".

Mercer, who served in the British Army in Northern Ireland, told the BBC that the revelations would add to families' trauma.



The idea that the death of their son or whatever is going to be the subject of a sordid investigation by journalists, who are at the end of the day hoping to make monetary profit out of it, is deeply unpalatable and will only add to the grief.

We're closing the live blog for tonight but coverage of the deepening scandal will continue later this morning.

In the meantime, here's a round up of Wednesday's main developments:

• The prime minister has bowed to pressure to hold at least one inquiry into illegal phone hacking at the News of the World. But he and deputy prime minister Nick Clegg are wrangling over the membership and status of that inquiry and a possible separate investigation into the future of media regulation. Clegg has called for a judge to take charge but Downing Street disagrees.

• The scandal intensified with the revelation that the families of members of the armed forces killed in Afghanistan and Iraq may have been targeted by a private investigator who hacked mobile phones for the News of the World. Officers at Scotland Yard investigating the allegations have contacted relatives.

• Scotland Yard has told the chancellor, George Osborne, that his name and home phone number appeared on notes kept by private investigator Glenn Mulcaire and former News of the World reporter Clive Goodman. A spokesman for the chancellor said there was no suggestion his phone had been hacked.

• Rupert Murdoch has said that Rebekah Brooks will stay as chief executive of News International. In a statement, he said that she will be in charge of the corporation's efforts to restore its reputation.

• London mayor Boris Johnson has said that he wants the Independent Police Complaints Commission to play a role in investigating the Metropolitan police's failure to conduct the first phone hacking inquiry properly.

• Labour MP Tom Watson has said that the police should investigate James Murdoch for trying to pervert the course of justice. In a parliamentary debate on the scandal, Watson said: "It is clear now that he personally and without board approval authorised money to be paid by his company to silence people who have been hacked and to cover up criminal behaviour within his organisation. This is nothing short of an attempt to pervert the course of justice."

• Shares in News Corp and BSkyB fell as the phone-hacking scandal put Murdoch and his bid to take control of the broadcaster under scrutiny. News Corp shares fell by 5% at one stage on Wall Street, to $17.17. BSkyB shares in London closed 2.1% lower at 827p.

• Procter & Gamble, Britain's biggest advertiser, plus O2, Vauxhall, Butlins and Virgin Holidays joined Ford in pulling ads from this weekend's News of the World.

Thanks for reading and thanks for your comments.