Phone hacking was widely discussed at Rupert Murdoch's News of the World, according to a reporter who was blamed as the sole culprit, contradicting repeated denials by senior executives and dragging Britain's prime minister back into the scandal.
In a letter written four years ago in an appeal against his dismissal from the tabloid, former royal reporter Clive Goodman said the practice of hacking was openly discussed until the then editor Andy Coulson banned open talk about it.
Coulson, who has repeatedly denied all knowledge of the practice, went on to become the official spokesman for Prime Minister David Cameron, a move which took the affair into the political arena and forced the government to turn on Rupert Murdoch after years of courting his favor.
This practice was widely discussed in the daily editorial conference, until explicit reference to it was banned by the Editor, the Goodman letter said. Other members of staff were carrying out the same illegal procedures.
Goodman, who was jailed in 2007 along with private detective Glenn Mulcaire, said he had been told he could keep his job if he agreed not to implicate the newspaper -- but was fired nonetheless after being sentenced to prison.
The committee investigating the hacking scandal said on Tuesday it would probably recall James Murdoch to give further evidence after receiving the Goodman letter and statements from other parties which contradicted his previous testimony.
When we have the further information that we are seeking, I think it is very likely that we will want to put those points to James Murdoch, said committee head John Whittingdale.
Tom Watson, the parliamentarian who has most doggedly pursued the scandal, told Sky News it could be months if not years before the full picture of what had happened at the newspaper emerged. If this letter is accurate, the whole foundation of the company's defense collapses, he said.
Allegations of widespread hacking at News Corp's British newspaper arm, and in particular reports that journalists had used investigators to hack into the voicemails of murder victims, sparked an uproar in Britain that dominated global headlines for almost the whole of July.
It forced the company to close the 168-year-old News of the World, drop its most important acquisition in decades -- the $12 billion purchase of BSkyB
Two of Britain's most senior police officers also quit over their failure to properly investigate the scandal and 12 people have since been arrested.
Jonathan Tonge, politics professor at Liverpool University, said Cameron's credibility had been damaged at a time when he is striving to fix what he calls Britain's broken society following riots and looting in a string of cities last week.
He's made a lot of worthy pronouncements about wanting to mend a broken society yet he's manage to appoint someone who presided over a paper that operated in the most amoral sense it's possible to conceive of, he said. That doesn't look good.
News International, the British newspaper wing of the News Corp media empire, did not deny the accusations made by Goodman.
We recognize the seriousness of materials disclosed to the police and parliament and are committed to working in a constructive and open way with all the relevant authorities, it said in a statement.
The Goodman letter added to pressure on senior News Corp executives, after two former News of the World colleagues previously contradicted information given by James Murdoch when he and his father Rupert appeared before the committee in July.
The issue in dispute is how much James Murdoch knew about the hacking, in particular the scale of the problem, when he knew it and whether he was involved in a cover-up.
Murdoch said he had not been in possession of all the facts when he approved a large payout in 2008 to English soccer executive Gordon Taylor, who had his phone hacked.
However Tom Crone, News International's former top legal officer, and Colin Myler, editor of the News of the World until it was shut down in July, have disputed this, saying they had previously shown Murdoch a 2005 email which suggested that the problem was more widespread.
Whittingdale said on Tuesday the panel was likely to recall James Murdoch to help explain the differences that remained over the accounts of what had happened at the newspaper. He said 80-year-old Rupert Murdoch was unlikely to be recalled.
James Murdoch was not overseeing the newspaper when the alleged offences occurred but he has been accused of trying to bury the extent of the problem.
Critics have argued that the size of the payout, which was 10 times the record amount awarded in a privacy case at the time, was intended to buy Taylor's silence.
In his written response published by the committee on Tuesday, James Murdoch said Myler and Crone had not told him that any wrongdoing extended beyond Goodman and Mulcaire.
I did not ask for any evidence -- I was content to rely upon Mr Myler and Mr Crone, he said.
(Additional reporting by Mohammed Abbas and Michael Holden; Editing by Mark Heinrich)