* Cameron, friend of former editor, says there should be
* Murdoch backs his senior executive as parliament holds
* Families of London bomb victims say may have had phone
(Adds News Corp statement, finance minister's phone may have
By Kate Holton and Jodie Ginsberg
LONDON, July 6 Rupert Murdoch promised full
cooperation on Wednesday to resolve a scandal shaking his media
empire after British Prime Minister David Cameron promised an
inquiry into what he called "disgusting" phone hacking by a
Responding in parliament to allegations that the News of the
World eavesdropped on voicemail for victims of notorious crimes,
including child murders and suicide bombings, Cameron said he
was "revolted" and would order inquiries, probably into both the
specific case and more widely into Britain's cut-throat media.
The opposition, keen to highlight Cameron's own ties to
Murdoch and to two former editors at the eye of the storm, noted
that any inquiry would not start, let alone finish, for months
if not years. Critics accused the Conservative government of
trying to bury the embarrassment of the long-running saga.
Murdoch, whose News International group faces boycotts from
advertisers and readers as well as questions over a takeover bid
for broadcaster BSkyB , made a rare public statement to
say he too found the hacking, and reports of buying tips from
police, "deplorable and unacceptable" and would ensure
But the 80-year-old Australian-born American media magnate
made clear he was standing by Rebekah Brooks, the 43-year-old
head of his British newspaper operation. She was editor in 2002
when, police say, a News of the World investigator listened to
-- and deleted -- voicemails left for the cellphone of missing
13-year-old Milly Dowler, who was later found murdered.
Cameron said: "We do need to have an inquiry, possibly
inquiries, into what has happened." The prime minister faces
questions over his own judgment in appointing Brooks's successor
as editor, Andy Coulson, as his spokesman. Coulson quit
Cameron's office in January, but denies knowing of any hacking.
Cameron, who regularly hosts Brooks at his home, said: "We
are talking about murder victims, potentially terrorist victims,
having their phones hacked into. It is absolutely disgusting."
In a further twist to the affair, a spokesman for Finance
Minister George Osborne confirmed media reports that police had
told the senior cabinet minister that his name and home number
were in notes kept by two people jailed for phone hacking.
Murdoch said in his statement: "Recent allegations of phone
hacking and making payments to police with respect to the News
of the World are deplorable and unacceptable.
"I have made clear that our company must fully and
proactively cooperate with the police in all investigations and
that is exactly what News International has been doing and will
continue to do under Rebekah Brooks' leadership."
The leader of the opposition Labour party, Ed Miliband, said
Cameron had made a "catastrophic error of judgment" in hiring
Coulson as his communication director and said Brooks, a
high-flying Murdoch confidante, should resign her current post.
She says she knew of no illegal hacking while editing the paper.
When its royal correspondent and an investigator were jailed
in 2007 for hacking into the cellphones of royal aides to break
a story about an injury to Prince William's knee, the newspaper
insisted it was a case of one rogue reporter.
After campaigning by celebrities and politicians who
suspected they too had been spied on, police launched a new
inquiry in January and, following the arrests of several
journalists, the affair has taken on dramatic new proportions.
Shares in Murdoch's News Corp, which also controls Fox
television, the Wall Street Journal, London's Times and the New
York Post among other titles, were down over 5 percent in New
York, while shares in BSkyB fell more than 2 percent.
Major advertisers abandoned the News of the World.
Speaking for one carmaker Lance Bradley said: "Mitsubishi
Motors in the UK considers this type of activity -- especially
in such a distressing case -- to be unbelievable, unspeakable
and despicable ... This is where we draw the line."
Internet campaigns and the actor Hugh Grant urged readers to
boycott the paper which, if successful, may prove more damaging
than political condemnation to Britain's best-selling Sunday
paper, read by some 7.5 million people on sales of 2.6 million.
Sales of News Corp's daily sister paper the Sun never
recovered in Liverpool after it offended the city's football
fans in the wake of the 1989 Hillsborough stadium disaster.
"We need an inquiry that uncovers all the practices and the
culture, not just of the News of the World but all tabloid
journalism in this country," said Grant, a fixture of the gossip
columns, who says he was a victim of phone hacking.
Though analysts believe the chances of the BSkyB purchase
being derailed are slim, the watchdog which oversees Britain's
broadcasting industry issued a statement pointing out that it
had a duty to assess whether holders of a broadcasting licence
are 'fit and proper'. Murdoch is trying to buy the 61 percent of
the BSkyB pay-TV group that it does not already own.
"There has been a shift in the last three days, there is now
a consensus that this needs full and proper scrutiny," media
consultant Steve Hewlett told Reuters.
Police have been criticised for being slow to investigate
the phone-hacking claims but reject suggestions this was because
of alleged payments to officers. The head of the Metropolitan
Police Paul Stephenson said allegations of "inappropriate
payments" to some officers were under investigation.
British politicians have said in the past they feared
criticising any of the Murdoch papers because they feared their
own private lives might be exposed.
Among further allegations, families of Londoners killed by
Islamist suicide bombers in 2005 said police had told them their
voicemail messages may have been intercepted.
Graham Foulkes, whose son David was one of 52 people who
died in the 7/7 bombings, told BBC radio he was contacted by
police after they found his private contact details on a list as
part of the investigation into hacking claims.
"We were using the phone frantically trying to get
information about David and where he may have been and ...
talking very intimately about very personal issues, and the
thought that these guys may have been listening to that is just
horrendous," Foulkes said. Relatives are preparing to mark the
sixth anniversary of the attacks on Thursday.
News International said it would be contacting the Defence
Ministry about reports the phone numbers of British soldiers
killed in Iraq and Afghanistan were found in the files of a
private investigator jailed for hacking phones.
"If these allegations are true we are absolutely appalled
and horrified," it said in a statement.
On Tuesday the company said new information had been
provided to police. The BBC said the material related to e-mails
appearing to show payments to police officers for information
and were authorised by Coulson when he was editor.
Commentators suggested information about the payments had
been released to deflect attention from Brooks, who unlike
Coulson is still a key part of Murdoch's business. The Guardian,
a left-leaning daily which has taken a lead in investigating the
scandal, said News International would also be saying that
Brooks was on holiday at the time of key alleged incidents.
"If Rebekah falls then who is next? Well it's James
Murdoch," said media consultant Hewlett, suggesting that keeping
her in her position served to protect her superior, Murdoch's
son James, from