* Cameron says sentence shows "no one is above the law"
* Newspaper shuttered after phone-hacking revelations
* Coulson sentenced to 18 months in jail (Adds quotes, former journalists' comments, background)
LONDON, July 4 (Reuters) - British Prime Minister David Cameron's former media chief Andy Coulson was jailed for 18 months on Friday for encouraging widespread phone-hacking by journalists to obtain scoops at the Rupert Murdoch-owned tabloid he edited.
Coulson, editor of the now defunct News of the World newspaper from 2003-2007, was convicted last week of conspiracy to intercept voicemails on mobile phones following a high-profile eight-month trial at London's Old Bailey court.
"What this says is that it's right that justice should be done and that no one is above the law," said Cameron, who has apologised for having hired Coulson.
Opposition Labour leader Ed Miliband has criticised Cameron for bringing a "criminal into the heart of Downing Street".
The maximum sentence the 46-year-old Coulson could have faced was two years but the judge said he had taken into account signs of good character outside his career.
Coulson showed no emotion as the sentence was read out in a packed Court 12 at London's Old Bailey court.
"Mr Coulson ... has to take the major blame for the phone hacking at the News of the World," judge John Saunders said. "He knew about it and encouraged it when he should have stopped it."
The sentence was passed exactly three years to the day that the Guardian newspaper published revelations that staff on the paper had hacked into the voicemails of murdered schoolgirl Milly Dowler.
That sparked widespread outrage across the country and prompted Murdoch to close the 168-year-old tabloid just days later. It emerged that the newspaper had listened into messages of thousands of targets - from movie stars to crime victims to government ministers - to obtain information for scoops.
The judge said Coulson must have known about the failure of the paper to immediately tell police about Dowler's voicemails, an act he described as "unforgivable".
Coulson, found guilty of conspiracy to illegally intercept voicemails on mobile phones, was the only one of seven defendants to be convicted following a long-running trial, one of the most expensive of its kind in British legal history.
Rebekah Brooks, his predecessor as News of the World editor who later ran News Corp.'s British newspaper arm, was among those found not guilty of phone-hacking and other allegations. The two had been lovers for part of the time they worked together, according to testimony that emerged during the trial.
Three ex-senior journalists from the paper who pleaded guilty before the trial began were also sentenced on Friday.
Assistant Editor Greg Miskiw and Chief Reporter Neville Thurlbeck were given six months in jail, while one-time News Editor James Weatherup received a four month suspended prison sentence.
Glenn Mulcaire, a former private investigator who had already gone to jail for earlier hacking offences on behalf of the paper, was given a six month suspended sentence after admitting further crimes including tapping Dowler's phone.
Phone-hacking became public knowledge in 2006 when the tabloid's former royal editor Clive Goodman and Mulcaire admitted they had hacked the phones of royal aides. The paper said at the time Goodman was a rogue reporter acting alone.
Coulson quit the paper after they were jailed, denying that he had knowledge of their illegal activity. Within months he began working for Cameron in opposition and joined him in Downing Street after the 2010 election.
Coulson resigned after revelations in 2011 that the hacking at his former newspaper had been much more expansive than the paper had previously admitted.
Former staff who worked on the paper have told Reuters hacking was carried out in a haphazard fashion, targeting whoever happened to be in the headlines at the time.
Coulson's trial heard how a woman called Laura Rooney was hacked simply because she had the same surname as the England soccer player Wayne Rooney.
The criminal action against Coulson is still not over. He faces a re-trial after the jury failed to reach a verdict over allegations he authorised Goodman to make illegal payments to police officers to obtain the telephone directories of Britain's royal family.
Prosecutors are also considering whether to instigate corporate charges against News Corp.'s British paper business. It has said it has changed the way it operates and has apologised to hacking victims. (Editing by Kate Holton, Peter Graff and Philippa Fletcher)