* Goodman jailed for accessing voicemail of royal aides' phones
* Tribunal may have aired allegations against other staff
* Brooks, other defendants deny charges against them
LONDON, Feb 26 (Reuters) - Rebekah Brooks, the former boss of Rupert Murdoch's British newspaper arm, told her trial on Wednesday she offered a journalist convicted of phone-hacking a job to avoid the "publicity nightmare" of him going to an employment tribunal.
Clive Goodman, the former royal editor of the News of the World newspaper that Brooks edited until 2003, was jailed in January 2007 for illegally accessing voicemail messages of phones belonging to aides to Britain's royal family.
On his release, Goodman was sacked but began unfair dismissal proceedings against News International, the British newspaper arm of News Corp., alleging others at the company including the then editor, Andy Coulson, and managing editor Stuart Kuttner, knew all about phone-hacking.
The jury had earlier in the trial been shown by the prosecution emails from Brooks to Goodman discussing a possible job, which the prosecution suggested showed she was aware that the phone-hacking had been going on.
Brooks, who is on trial in London for offences including conspiracy to hack phones, said the firm did not want to agree a financial settlement with Goodman, but also wanted to avoid the embarrassment of a public employment tribunal and the damaging headlines that might produce.
The idea of offering Goodman an alternative job came from herself and Les Hinton, then the boss of News International, she said.
"It was during the conversation with him (Hinton) that he explained this potential publicity nightmare that could happen," she told the court as she gave evidence for a fourth day.
In April 2007, Brooks said she met Goodman to offer him a role working on a royal magazine the company were producing to commemorate the 10th anniversary of Princess Diana's death.
"Clive was angry that he had been dismissed and felt he had been unfairly treated by the company," she said.
"For the company to then have to go through these allegations, although unfounded, in an industrial tribunal (where) anyone can say what they like, it was a delicate situation."
Goodman's response was "muted" and he rejected the offer and, a month later, another job working at the Sun where she was the then editor, Brooks said. He then later agreed a settlement with the company, the court was told.
Asked by her lawyer Jonathan Laidlaw if she thought Goodman's allegations were true or had worried about her own position in the light of his conviction, she replied: "Absolutely not", adding that as far as she knew, the police, the company and regulatory bodies had drawn a line under the issue.
"Police said nothing more to see, time to move on," she said. "I had a belief and still have a belief this was not going on under my editorship. I still believe that now as I did back in 2006. Not knowing doesn't mean it not happening."
The trial has been told Glenn Mulcaire, a private detective who worked for the News of the World and who was jailed with Goodman in 2007, has now admitted hacking the phone of murdered schoolgirl Milly Dowler in 2002.
The revelation of that hacking in July 2011 led to Murdoch closing down the News of the World and Brooks was also forced to resign from her role as chief executive of News International.
Earlier, Brooks told the court she had been asked to be a prosecution witness by police in 2006 after they discovered her own mobile had been repeatedly hacked by Mulcaire.
But she declined after discussing the matter with senior figures from News International.
"We all agreed it would not be the right thing for me to make a formal complaint," she said.
Brooks denies conspiracy to illegally intercept voicemail messages, authorising illegal payments to public officials and perverting the course of justice.
Coulson, Kuttner and Goodman and three others are also on trial for a variety of offences. They all deny wrongdoing and the trial continues.