£3m Payout Over Milly Dowler Phone Hacking

Rupert Murdoch is personally donating £1m to charity as part of a compensation deal agreed with Milly Dowler's family, it has been confirmed.

The family of the murdered schoolgirl, whose phone was allegedly hacked during her disappearance, are to receive a £2m payout from News International (NI).

Mr Murdoch will give £1m from his own pocket to six charities selected by the Dowlers.

Confirmation of the payouts came as the media mogul was challenged over alleged computer hacking at a shareholders' meeting for News Corporation - NI's parent company - in Los Angeles.

Labour MP Tom Watson fired questions at the 80-year-old company chairman.

Mr Murdoch pledged to investigate Mr Watson's claim that News Corporation had hired a former prisoner to hack the computer of an ex-army intelligence officer.

Mr Watson revealed no further details about who he was implicating, but told Mr Murdoch News Corp could be facing "a Mulcaire II", referring to private investigator Glenn Mulcaire who was jailed for intercepting voicemailes.

In a statement about the payout to the Dowlers, Mr Murdoch described the alleged hacking by the News Of The World as "abhorrent" and "awful".

He said: "When I met with the Dowlers in July, I expressed how deeply sorry I was for the hurt we had caused this family.

"The behaviour that the News Of The World exhibited towards the Dowlers was abhorrent and I hope this donation underscores my regret for the company's role in this awful event.

"I also hope that through the personal donation something positive can be done in memory of their daughter."

The deal was announced in a joint statement from the family and News International.

The charities have been selected based on "causes close to Milly and those that provide support to other victims of crime", it explained.

They are Shooting Star Chase, Child Victims of Crime, Suzy Lamplugh Trust, Hampton Pool Trust, Braintumouruk.org and Cancer Research.

Sky News had already revealed the charities set to benefit and how the money would be split.

Half the money will go to Shooting Star Chase , a children's hospice close to the Dowler family home in Surrey.

The Suzy Lamplugh Trust , named after the missing London estate agent and which helped the Dowlers after Milly disappeared, receives £100,000.

Another £100,000 is going to the schoolgirl's local swimming pool, the Hampton Pool Trust.

The three other charities also receive £100,000 each.

The Dowler family said: "Nothing that has been agreed will ever bring back Milly or undo the traumas of her disappearance and the horrendous murder trial earlier this year.

"The only way that a fitting tribute could be agreed was to ensure that a very substantial donation to charity was made in Milly's memory.

"We hope that projects will be undertaken so that some good can come from this."

Allegations that the News Of The World hacked into the schoolgirl's voicemails when she was missing emerged earlier this year.

Messages were apparently accessed and voicemails left for Milly were deleted to make room for more recordings.

This gave the family false hope she was still alive because messages were disappearing.

The revelations proved a turning point in the hacking row and led to the Sunday tabloid being shut down.

Former bouncer Levi Bellfield is serving life for the schoolgirl's murder.