Day of reckoning: Phone-hacking reaches the Commons

By Ian Dunt

There will be full public inquiries into the morality of the press and the relationship between newspapers and the police, David Cameron announced today.

However, the prime minister refused to demand the resignation of Rebekah Brooks, chief executive of Rupert Murdoch's British operations, or to pause the decision over News International's takeover of BSkyB.

Ed Miliband, who enjoyed one of his most widely-praised PMQs performances since he took the Labour leadership, welcomed the inquiries but said the prime minister was "out of touch with millions of people" if he thought it was acceptable to allow the BSkyB judgement to take place while the company was under investigation by the police.

"He hasn't shown the leadership necessary on BSkyB, he hasn't shown the leadership necessary with News International," Mr Miliband said.

"He made a catastrophic error of judgement by bringing Andy Coulson into the heart of his Downing Street machine."

In a gripping PMQs exchange, a visibly nervous Mr Cameron replied: "I take full responsibility for everyone I employ, for everyone I appoint, for everything this government has done.

"I feel so appalled by what's happened. That's why it's important there's a full police investigation."

The announcement came as MPs prepared for a three-hour emergency debate on phone-hacking, where some figures are expected to use parliamentary protection to air allegations about the practise.

John Bercow authorised the debate yesterday, in what was seen as another show of force against the government.

The Speaker accepted Labour MP Chris Bryant's request for a debate despite government reluctance. Labour MPs shouted "shame" at government ministers as they refused to back the demand.

The developments follow reports about News of the World journalists hacking the voicemail messages of bereaved families, which has now extended to those who died in the 7/7 bombings.

The families of all high-profile murders are now understood to be on police contact lists, after the relatives of Holly Wells, Jessica Chapman and Milly Dowler were contacted over alleged hacking.

Graham Foulkes, whose son David died in the 7/7 bombings, said he had been contacted by officers after they found his landline and mobile phone numbers in the records of private detective Glen Mulcaire.

Speaking to the Today programme, Mr Foulkes said he wanted to discuss the matter directly with Rupert Murdoch, owner of News of the World parent company Newscorp.

"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," he said.

The shock to the families of the 7/7 bombings will be particularly damaging, as they prepare to mark the sixth anniversary of the bombings tomorrow.

The scandal was once viewed by Downing Street and News Corp as something which was of interest only to media professionals and middle-class liberals.

But it has now become significantly more morbid and serious, as have its political implications.

The News of the World seemingly tried to consolidate Ms Brooks' position yesterday by releasing details of payments made by Mr Coulson to senior police officers between 2003 and 2007.

"As a result of media enquiries, it is correct to state that new information has recently been provided to the police," it said in a statement.

"As News International and News Group Newspapers has reiterated many times, full and continuing cooperation has been provided to the police since the current investigation started in January 2011."

The news was confirmed by the police, who said an investigation had started by the Independent Police Complaints Commission (IPCC).

The move is the first instance of a split at News of the World, which had previously held the firm line that phone-hacking was the work of one rogue reporter. It suggests that senior figures at the company are now prepared to sacrifice Mr Coulson if they think it can save Ms Brooks.

Such a development is problematic for Mr Cameron, because everything said against Coulson reflects on his judgement, due to his decision to hire him as a communications chief.

The newspaper faced significant financial loses yesterday after a string of high-profile companies, including Ford, npower, Halifax, T-Mobile and Orange, announced that they would review of cancel their advertising with the News of the World.

Several other companies, including Vauxhall and the Co-operative, joined the list today.

In what is rapidly becoming the biggest crisis in Mr Murdoch's career since the Wapping strike, he may even face losing his battle to gain control of BSkyB.

The government had previously managed to keep the two issues apart, saying the BSkyB decision, which is being considered by media secretary Jeremy Hunt, is based solely on "media plurality".

But reports yesterday suggested that media watchdog Ofcom is prepared to examine whether News Corp chief executives are "fit and proper persons" to own BSkyB.