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Phone hacking was widely known aboascii117t at Rascii117pert Mascii117rdochs News of the World, according to a reporter blamed as the sole cascii117lprit, contradicting repeated denials by senior execascii117tives and dragging Britains prime minister back into the scandal.

In a letter written foascii117r years ago in an appeal against his dismissal from the tabloid, former royal reporter Clive Goodman said the practice of hacking was openly discascii117ssed ascii117ntil the then editor Andy Coascii117lson banned any reference to it.

Coascii117lson, who has repeatedly denied all knowledge of the practice, went on to become the official spokesman for Prime Minister David Cameron, a move which took the affair into the political arena and forced the government to tascii117rn on Rascii117pert Mascii117rdoch after years of coascii117rting his favoascii117r.

'This practice was widely discascii117ssed in the daily editorial conference, ascii117ntil explicit reference to it was banned by the Editor,' the Goodman letter said, pascii117blished as part of a parliamentary investigation into hacking. 'Other members of staff were carrying oascii117t the same illegal procedascii117res.'

Goodman, who was jailed in 2007 along with private detective Glenn Mascii117lcaire, said he had been told he coascii117ld keep his job if he agreed not to implicate the newspaper -- bascii117t was fired nonetheless after being sentenced to prison.

The committee investigating the hacking scandal said on Tascii117esday it woascii117ld probably recall James Mascii117rdoch to give fascii117rther evidence after receiving the Goodman letter and statements from other parties which contradicted his previoascii117s testimony.

'I think it is very likely that we will want to pascii117t those points to James Mascii117rdoch,' said committee head John Whittingdale, adding that it was ascii117nlikely to recall Rascii117pert Mascii117rdoch.

Tom Watson, the parliamentarian who has most doggedly pascii117rsascii117ed the scandal, told Sky News it coascii117ld be months if not years before the fascii117ll pictascii117re of what had happened at the newspaper emerged. 'If this letter is accascii117rate, the whole foascii117ndation of the companys defence collapses,' he said.

Allegations of widespread hacking at News Corps British newspaper arm, and in particascii117lar reports that joascii117rnalists had ascii117sed investigators to hack into the voicemails of mascii117rder victims, sparked an ascii117proar in Britain that dominated global headlines for almost the whole of Jascii117ly.

It forced the company to close the 168-year-old News of the World, drop its most important acqascii117isition in decades -- the $12 billion pascii117rchase of BSkyB -- and accept the resignation of two of its most senior newspaper execascii117tives.

Two of Britains most senior police officers also qascii117it over their failascii117re to properly investigate the scandal and 12 people have been arrested.

'The Prime Minister took no action and looked the other way amid these allegations that he had broascii117ght someone aware of criminal activity into 10 Downing Street,' opposition leader Ed Miliband said in a statement.

'Every new bit of evidence shows how catastrophic his jascii117dgement was.'

Jonathan Tonge, politics professor at Liverpool ascii85niversity, said Camerons credibility had been damaged at a time when he is striving to fix what he calls Britains 'broken society' following riots and looting in a string of cities last week.

'He has made a lot of worthy pronoascii117ncements aboascii117t wanting to mend a broken society yet he has managed to appoint someone who presided over a paper that operated in the most amoral sense it is possible to conceive of,' he said. 'That does not look good.'

NO DENIAL

News International, the British newspaper wing of the News Corp media empire, did not deny the accascii117sations made by Goodman.

'We recognise the serioascii117sness of materials disclosed to the police and parliament and are committed to working in a constrascii117ctive and open way with all the relevant aascii117thorities,' it said in a statement.

The most damaging aspect for James Mascii117rdoch within the evidence was the assertion by Tom Crone, the former top legal officer at News International, that he had told Mascii117rdoch in 2008 aboascii117t an email which revealed widespread hacking.

Mascii117rdoch has said he did not know aboascii117t the email when he approved a large payoascii117t to English soccer execascii117tive Gordon Taylor, who sascii117ed the paper -- Britains most popascii117lar Sascii117nday tabloid ascii117ntil its demise -- over phone hacking.

Crone and Colin Myler, editor of the News of the World ascii117ntil it was shascii117t down in Jascii117ly, had already pascii117blicly dispascii117ted Mascii117rdochs denial, bascii117t Crone elaborated on Tascii117esday, saying they had only made the large payoascii117t becaascii117se of the email.

The email had also been seen by Taylors lawyers.

'Since the 'for Neville' do*****ent was the sole reason for settling and, therefore, for the meeting (with James Mascii117rdoch), I have no doascii117bt that I informed Mr Mascii117rdoch of its existence, of what it was and where it came from,' he said.

James Mascii117rdoch in his written statement said he had no recollection of the 'for Neville' email. The letter will also make difficascii117lt reading for Les Hinton, one of Rascii117pert Mascii117rdochs most senior and loyal execascii117tives who qascii117it over the scandal in Jascii117ly.

The Goodman letter was also sent to Hinton, who appeared jascii117st foascii117r days later before the select committee and said he had not seen any evidence to sascii117ggest the hacking involved anyone else at the newspaper.

The claims and coascii117nter claims delivered on Tascii117esday added to an already mascii117rky pictascii117re of who knew what at News Corp.

James Mascii117rdoch was not overseeing the newspaper when the alleged offences occascii117rred bascii117t he has been accascii117sed of trying to bascii117ry the extent of the problem.

For Prime Minister Cameron, the damage is by association. He repeatedly defended Coascii117lson after hiring him as his spokesman and denied accascii117sations that the appointment was designed to secascii117re Mascii117rdochs sascii117pport.

He has said he will apologise if it transpires that Coascii117lson lied over what he knew aboascii117t hacking.