News Corp's Australian shares slumped 5.5 percent on Monday to a two-year low, as the phone hacking scandal fallout worsened, with the arrest of the former head of Rupert Murdoch's UK newspaper arm and the resignation of Britain's police chief.

The shares fell as low as A$13.96, off 5.5 percent, to the lowest since July 23 2009.

(Reporting by Victoria Thieberger; Editing by Balazs Koranyi)