News International boss Rebekah Brooks yet again refused to quit today despite massive pressure including remarks from Prime Minister David Cameron that he would have accepted her resignation.
She apologised to News of the World staff for ‘operational issues’ and told the 200 journalists that attempts would be made to find them work in other newspapers in the group.
Ms Brooks was editor of the paper at the time of murdered schoolgirl Milly Dowler’s phone being hacked and since then there have been allegations of 4,000 cases of hacking including the phones of politicians and celebrities.
Referring to reports that she had offered her resignation, he said: “On the case of Rebekah Brooks... it has been reported that she offered her resignation over this and in this situation I would have taken it.”
While he also said a Judge will oversee a full inquiry into the whole saga, he remained loyal to his former communications managers and NOTW editor Andy Coulson who could be arrested today in relation to the allegations of phone hacking at by many of paper’s journalists.
Promising action to "get to the bottom" of the phone hacking scandal but said it was not just about the press but about the police and "about how politics works too".
Mr Cameron spoke out as as shockwaves from the scandal, which forced the closure of the 168-year-old News of the World last night, continued to reverberate.
He said a judge would be appointed to run an independent inquiry into how the scandal was allowed to happen, adding: "No stone will be left unturned."
Mr Cameron said a second inquiry would be held to examine the ethics and culture of the press and said that the Press Complaints Commission had failed, adding: "I believe we need a new system entirely".
Earlier today Mr Cameron’s former communications chief Andy Coulson was arrested by detectives investigating the hacking and the paper’s former Royal Editor Clive Goodman was rearrested in relation to payments to to police.
This afternoon the offices of the the Daily Star on Sunday were raided by police in London as speculation increased that other tabloid newspapers could become embroiled in the scandal.
Accepting some of the blame, Mr Cameron said party leaders "were so keen to win the support of newspapers we turned a blind eye to the need to sort this issue."
His comments came as his former communications chief and News of the World editor Andy Coulson was facing arrest over alleged phone hacking and illegal payments to police officers.
Mr Cameron said the decision to hire Mr Coulson was "mine and mine alone", adding: "I take full responsibility for it."
The Prime Minister said the bulk of the first inquiry, which would also cover other newspapers and the failure of the first Scotland Yard investigation into phone hacking, could not be carried out until after the new police probe was complete.
But he said a second inquiry would begin immediately into the culture, ethics and practices of the British press.
"Police investigations can only get you so far," he told a Downing Street press conference.
"What people really want to know is what happened and how it was allowed to happen.
"That is why the Deputy Prime Minister (Nick Clegg) and I have agreed it's right and proper to establish a full public inquiry to get to the bottom of what happened.
"A judge needs to be in charge so there is no question that it's totally independent and things are done properly."
Amid demands from Labour leader Ed Miliband to apologise for hiring Mr Coulson, Mr Cameron said he took "full responsibility" for the decision but said others would judge whether it was the right decision to give him a second chance.
Mr Cameron said that the Press Complaints Commission had shown itself to be "ineffective and lacking in rigour" and there was a need for an entirely new system of regulation for the press.
He said that the judge-led inquiry would look into the questions of "why did the first police investigation fail so abysmally; what exactly was going on at the News of the World and what was going on at other newspapers?"
He added: "Of course the bulk of this inquiry can only happen when the police investigation has finished. That is what the law requires.
"But we that doesn't mean we can't do anything now. So we will consult now with the select committees and others on the terms of reference, the remit and the powers. What we can get started, we will get started.
"I want everyone to be clear that everything that happened is going to be investigated. The witnesses will be questioned by a judge under oath and no stone will be left unturned."
Mr Cameron said an inquiry into the wider lessons for the press, including the future of its regulation, could be got on with "straight away".
"I want to establish a second inquiry to begin at the earliest available opportunity, ideally now - this summer," he said.
That inquiry would be conducted by a panel of figures from "a range of different backgrounds who command the full support, respect and above all confidence of the public".
He said: "This second inquiry should look at the culture, the practices and the ethics of the British press.
"In particular, they should look at how our newspapers are regulated and make recommendations for the future."
Mr Cameron said the Press Complaints Commission had "failed" and, in the case of phone hacking allegations, been "completely absent".
He said: "There is a strong case for saying it is institutionally conflicted, because competing newspapers judge each other. As a result, it lacks public confidence.
"So I believe we need a new system entirely.
"It will be for the inquiry to recommend what that system should look like. But my starting presumption is that it should be truly independent - independent of the press, so the public will know that newspapers will never again be solely responsible for policing themselves."
On the prospective takeover of BSkyB by Rupert Murdoch's News Corp, Mr Cameron said this would now take "some time" to decide after recent events.
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.