Police arrested David Cameron's former spokesman on Friday over the scandal that has shut down Rupert Murdoch's News of the World, forcing the prime minister to defend his judgment while promising sweeping new rules for the British press.

As Cameron was fielding hostile questions over why he hired Andy Coulson from the editor's chair at the tabloid in 2007, despite knowing that one of his journalists had been jailed for hacking into voicemails in search of scoops, Coulson was being arrested by police on suspicion of conspiring in the practice.

Cameron said he took full responsibility for his decision to hire Coulson, who quit Downing Street in January when police relaunched inquiries. But the premier rebuffed direct criticism and strove to spread the blame for an affair that has generated public outrage against the press, politicians and police.

Murder victims, terrorist victims, families who have lost loved ones in war... he said: That these people could have had their phones hacked into in order to generate stories for a newspaper is simply disgusting.

So widespread was the rot, Cameron told an emergency news conference after Murdoch shut down his best-selling Sunday paper, that only a completely new system of media regulation and a full public inquiry into what went wrong over a decade at News of the World would meet public demand.

This scandal is not just about some journalists on one newspaper, Cameron said. It's not even just about the press. It's also about the police. And, yes, it's also about how politics works and politicians too.


While defending himself, the Conservative leader said politicians of all parties had been in thrall to press barons for decades and he indicated a new willingness to challenge the Murdoch empire by withholding overt endorsement of News Corp's bid for broadcaster BSkyB.

Shares in the pay-TV chain fell 4 percent after the media ministry said it would take events at the News of the World into account and take its time before giving any approval.

Cameron also criticized his friend and neighbor Rebekah Brooks, Coulson's predecessor as editor and now a top executive and confidante of Murdoch. She should have resigned herself, he said, after closing down the newspaper at a cost of 200 jobs.

Cameron's Labor opponent Ed Miliband, and his Liberal Democrat deputy prime minister, Nick Clegg, offered broadly similar prescriptions for addressing what many Britons believe is a tabloid press out of control in its readiness to invade the privacy of both celebrities and vulnerable people.

But media and civil liberties groups will resist efforts to impose regulation they believe would curb free speech or thwart scrutiny of corruption and hypocrisy.


Cameron is still likely to face the stiffest questioning over his association with Coulson, 43, who brought a sense of what grass-roots wanted to the wealthy Cameron and his privately-educated fellow Conservative leaders.

Very bad things had happened at the News of the World. He had resigned. I gave him a second chance, Cameron said of hiring Coulson in 2007. I wasn't given any specific sort of actionable information about Andy Coulson.

But critics pointed out that many British journalists doubted Coulson's assertions that he, as News of the World editor, had known nothing of the hacking of phones used by aides to Prince William -- for which royal correspondent Clive Goodman and a private detective were jailed in 2007.

Alan Rusbridger, editor of the left-leaning Guardian which has campaigned to expose more of the scandal, told Reuters that Cameron could be faulted: I just wonder what vetting process was done. I think it shows extremely poor judgment.

Goodman was re-arrested on Friday, a police source said, to answer questions about alleged payments to police officers.

Murdoch, the 80-year-old Australian-born billionaire, ordered that Sunday's News of the World should be the last after 168 years as he battles to prevent the scandal fueling political opposition to his $22-billion takeover bid for BSkyB -- a company that makes 100 times the profit of the newspaper.

Cameron's government has already given its informal blessing to the deal, despite concern especially on the left that it would give Murdoch's U.S.-listed News Corp too much power. But at Friday's news conference, the prime minister refrained from any endorsement of the BSkyB bid, and stressed that proper legal processes would take some time.

Shares in BSkyB, in which Murdoch already has a 39 percent stake, dropped nearly 4 percent on concerns about approval.


Brooks, like Coulson, has denied knowing that journalists on the paper were hacking the voicemails of possibly thousands of people. Unlike Coulson, the 43-year-old is still employed, running Murdoch's British newspaper arm News International.

Brooks has become the focus of anger among the 200 News of the World staff sacked with little ceremony on Thursday. There was seething anger and pure hatred directed toward her, one reporter said: We think they're closing down a whole newspaper just to protect one woman's job.

Cameron said he had heard that Brooks offered her resignation. I would have taken it, he said.

Labor leader Miliband also said she should go.

Fellow journalists saluted the end of a venerable, muckraking title: Hacked To Death headlined Murdoch's own Times newspaper in London. Paper That Died Of Shame was the verdict of the Daily Mail, a rival tabloid.

Both Cameron and Miliband have concluded that a system under which newspaper publishers largely supervise their own code of conduct must be tightened. Cameron said an independent panel could start work within months -- much sooner than the public inquiry which must wait for the end of the police case -- and that it must be free to draft its own proposals.

But he added: It should be truly ... independent of the press, so the public will know that newspapers will never again be solely responsible for policing themselves.

This new system of regulation must strike the balance between an individual's right to privacy and what is in the public interest.

The police also face tough questions over why an initial investigation into phone hacking was closed after Goodman was jailed in 2007. Detectives are also now looking into payments, in the tens of thousands of pounds, by journalists to police officers, mostly for information.

A police source said Coulson had been arrested on suspicion of conspiring to intercept communications and of corruption.

Cameron, trying to strike a balance between accepting his own share of responsibility and sharing out blame to his opponents said: It's no good ... just criticizing the police.

Because party leaders were so keen to win the support of newspapers ... we turned a blind eye to the need to sort this issue, get on top of the bad practices.

Emphasizing that he saw it as an issue which Labor, in power with the endorsement of the Murdoch press for 13 years, should not make electoral capital of, Cameron likened it to a recent scandal over parliamentary expenses, which tarnished the image of politicians across the party spectrum.


Several other journalists have been arrested in recent weeks as police pursue inquiries, much of them based on the files of the investigator jailed with Goodman four years ago.

Police say the files contain some 4,000 names -- a revelation which vindicated complaints by celebrities and politicians who campaigned for police to reopen investigations in the face of apparent reluctance from senior officers and from Cameron and his Labor predecessors Tony Blair and Gordon Brown.

The scandal took on devastating proportions for Murdoch this week with the leak of an allegation that a News of the World investigator had, in 2002 when Brooks was editor, not only listened in to cellphone voicemails left for missing 13-year-old Milly Dowler but deleted some to make room for more.

The schoolgirl was found murdered six months later, but her killer was only convicted last month, ensuring public memories of the notorious case were still vivid and raw.

As more allegations were published, including that the phones of soldiers killed in Iraq and Afghanistan may have been hacked, the tabloid hemorrhaged advertising, alienated readers and turned an aging asset into a growing threat to Murdoch's ambitions for BSkyB.

The ruthlessness of the closure, announced by Murdoch's son and heir apparent James, was a dramatic turn in his father's long and controversial career which now spans the globe and includes Fox television and the Wall Street Journal in the United States and major broadcasting operations in Asia.

James Murdoch said the News of the World, which his father bought in 1969, had been sullied by behavior that was wrong.

Many analysts, however, expect the gap in the shrinking but still lucrative Sunday market to be short-lived; the Internet domain name sunonsunday.co.uk was registered on Tuesday, according to domain names service Who.is. That makes sense if the News of the World is to be replaced by its daily sister paper the Sun publishing on a seventh day.

Last month, Brooks prepared the ground for seven-day working across News International's four titles, and appointed two new managing editors, one with responsibility for the tabloids and one for the broadsheets. Other publishers have also tried to cut costs by merging Sunday and daily operations.

(Additional reporting by Georgina Prodhan, Kate Holton, Mike Collett-White and Stefano Ambrogi; Writing by Alastair Macdonald; Editing by Sonya Hepinstall)