Rupert Murdoch's News International yesterday conceded that the phone hacking scandal went to the heart of Britain's top-selling newspaper, announcing that it had sacked a senior editor at the News of the World and passed "significant new information" to police, including emails which could implicate other executives.
Scotland Yard immediately announced a new investigation into the damaging allegations, which have seen NOTW journalists accused of systematically accessing the voicemails of public figures and sparked criticism of police for their failure to question key figures at the newspaper, including the former editor Andy Coulson, during four years of supposed inquiries. Mr Coulson resigned as David Cameron's spokesman on Friday because of the clamour surrounding the hacking claims. In a move that will be seen as the start of a new bid by News International to try to draw a line under the affair, the company said it had dismissed Ian Edmondson, the paper's assistant editor (news) and part of Mr Coulson's inner circle, who was suspended in December after he was linked to the activities of Glenn Mulcaire, the private detective jailed for hacking the phones of Prince William's aides.
Sources said a trawl of emails dating back nearly six years had found a dossier of "highly damaging evidence" which has been passed to the Yard.
The Independent understands that detectives will scrutinise the information from thousands of messages found on the machine for any indication that Mr Edmondson or other figures at the newspaper were responsible for instructing Mr Mulcaire to target the phones of celebrities and politicians prior to 2006.
In a statement, News International said: "The News of the World has terminated the employment of Ian Edmondson... Material evidence found during the course of the subsequent investigation has led to [his] dismissal. News International has informed the police, handed over the material it has found and will give its full co-operation."
The sacking of one of Mr Coulson's most trusted tabloid attack dogs represents a dramatic change in the stance of News International, which as recently as this month was maintaining its stance that the hacking was restricted to a single "rogue reporter" in the shape of the former royal editor Clive Goodman, who was imprisoned along with Mr Mulcaire. Both men were paid money by the NOTW after their convictions, and neither has spoken out.
Downing Street insisted last night that the new police inquiry was a "complete surprise" to Mr Cameron. It was unclear whether Mr Coulson, who has always denied knowledge of the phone hacking, had been aware of developments at his former employer.
Mr Edmondson, who was hired by the Sunday tabloid in November 2004 under Mr Coulson's editorship, was effectively No 3 on the newspaper and part of a select group of editorial staff who would discuss the most sensitive stories with the editor. Last night lawyers representing Mr Edmondson did not respond to requests for a response on his behalf.
Mr Murdoch is said to be furious at the failure of his managers to end the hacking scandal. His company's volte-face comes just days after he cancelled his trip to the Davos World Economic Forum and arrived at New International's Wapping headquarters to hold crisis talks with senior staff, including the chief executive and former News of the World editor Rebekah Brooks.
The meeting coincided with the drawing up of a strategy to end the damage being caused by the affair, which has tarnished the reputation of the Sunday paper and led to a queue of at least 20 alleged hacking victims - from the comedian Steve Coogan to the former deputy prime minister John Prescott - bringing proceedings in the High Court. Legal experts have said they expect News International to seek rapid settlement in many of the cases, which have seen payouts as high as seven figures to the publicist Max Clifford and Gordon Taylor, chief executive of the Professional Footballers' Association.
The new Yard investigation will be subjected to fierce external scrutiny after strong criticism of its original inquiry in 2006, during which detectives seized thousands of documents from Mulcaire's home detailing his hacking operations against at least 91 people.
Subsequent disclosure of some of these documents in civil cases has revealed the names of at least two NOTW editors, including Mr Edmondson, who commissioned the private detective. But officers failed to question anyone at the paper apart from Mr Goodman.
The Labour MP Tom Watson yesterday urged the Director of Public Prosecutions to order an "urgent investigation" by an outside force into the Yard's handling of the hacking affair, saying evidence against the police could amount to "conspiracy to pervert the course of justice". A CPS review of existing evidence in the case is expected to be completed in March.
In a move interpreted as a tacit admission that the investigation had been mishandled, the Yard said the new inquiry would no longer be overseen by its counter-terrorism command, headed by acting deputy commissioner John Yates, the officer who headed the "cash for peerages" inquiry and announced in 2009 that "no further investigation" was required of the hacking claims. The new inquiry will be handled by the specialist crime directorate, in charge of issues such as gun and gang-related crime.
Ed Miliband spoke for the first time about the hacking scandal. "I think actually it would be good for the journalism profession if this is once and for all sorted out and people get to the bottom of who did what and anybody who's done something wrong gets punished."