Police have raided the offices of the Daily Star Sunday in London following on from allegations of phone hacking and payments to police at competitor News of the World.
The newspaper is owned by media mogul Richard Desmond.
It is understood the investigation follows fears that more than one newspaper group used underhand tactics to get stories.
Earlier today Andy Coulson, the former communications chief for David Cameron, has been arrested by detectives investigating alleged phone hacking and illegal payments to police during his tenure as News of the World editor.
And Clive Goodman, the newspaper’s former Royal Editor was rearrested by detectives who also searched his Surrey home in connection with allegations of illegal payments to police.
Goodman was jailed for four months in 2007 when he pleaded guilty to intercepting phone messages while his co-conspirator private detective Glenn Mulclaire was sentenced to six months.
Mr Coulson, 43, was arrested by appointment at 10.30am at a south London police station and remains in custody.
His arrest was conducted by officers from Operation Weeting, the inquiry into phone hacking at the Sunday tabloid, and Operation Elveden, the investigation into allegations that a handful of police officers were illegally paid £100,000 by the newspaper during Coulson’s editorship.
It means he will be questioned about both sets of allegations.
A Scotland Yard spokesman said: “The Metropolitan Police Service has this morning arrested a member of the public in connection with allegations of corruption and phone hacking.
“At 10:30 officers from Operation Weeting together with officers from Operation Elveden arrested a man on suspicion of conspiring to intercept communications, contrary to Section1(1) Criminal Law Act 1977 and on suspicion of corruption allegations contrary to Section 1 of the Prevention of Corruption Act 1906.
“The man, aged 43yrs, was arrested by appointment at a South London police station. He is currently in custody.”
The 43-year-old will face questions over whether he was aware phone hacking was taking place and whether he ever personally authorised it.
He is likely to be bailed to return at a later date as has been the case with the five others arrested in connection with the current police inquiry.
The arrest is a huge blow to the Prime Minister, who appointed him Downing Street director of communications after last year's general election.
Mr Coulson was forced to resign in January over continuing allegations of phone hacking and the Prime Minister has been widely criticised for the decision to hire him in the first place.
At a press conference this morning, the Prime Minister said: "I decided to give him a second chance – and no one has ever raised serious concerns about how he did his job for me. But the second chance didn’t work out and he had to resign all over again."
"The decision to hire him was mine – and mine alone – and I take full responsibility for it."
Ed Miliband said the decision to bring Mr Coulson into government was an "appalling error of judgment" and called on the Prime Minister to apologise
Separately, Mr Coulson is facing a perjury investigation after Scottish police after they announced they are to examine testimony in the Tommy Sheridan trial.
The Crown Office yesterday asked Strathclyde Police to conduct a “preliminary assessment” of witness evidence in the trial in light of the latest allegations in the phone hacking scandal.
Mr Coulson, then Downing Street director of communications, told the trial last December that he had no knowledge of illegal activities by reporters while he was editor of the tabloid newspaper.
He also denied knowing the paper paid corrupt police officers for tip-offs, but it has been reported this week that News International has uncovered e-mails showing payments were made during his editorship.
Although Strathclyde Police refused to provide details, it is understood they will concentrate on the testimony of Mr Coulson, Bob Bird, the News of the World’s Scottish editor, and Douglas Wight, the Scottish edition’s former news editor.
They will then report to the Area Procurator Fiscal in Glasgow, who will consider whether there is enough prima facie evidence to justify a perjury investigation.
British Prime Minister David Cameron admitted today that he would have accepted the resignation of News International boss Rebekah Brooks if she had asked, in light of the scandal that has led to the closure of the News of the World.
Journalists at the News of the World newspaper raged today that they had been betrayed by Rebekah Brooks, News International's chief executive, who faces calls for her resignation, after revelations that the NOTW under her editorship hacked the phone of murdered schoolgirl Milly Dowler.