Hunt ‘asked Murdoch to steer No 10’s policy on hacking’

Jeremy Hunt stood accused last night of conspiring with News International to prevent a public inquiry into the phone-hacking scandal.

The revelations at the Leveson Inquiry implicate Downing Street for the first time in a potential cover-up and heap further pressure on the Culture Secretary as he prepares to give evidence to the Inquiry later this month.

A damning email released to the Inquiry yesterday suggests Mr Hunt asked the company to "privately advise" and "guide his and No 10's thinking" on the unfolding scandal. The existence of the previously secret email emerged during more than five hours of questioning of News International's former chief executive Rebekah Brooks at the Leveson Inquiry.

Brooks also revealed that:

* She had privately discussed the £8bn takeover deal of BSkyB with the Chancellor, George Osborne, over dinner. Before the dinner, Ofcom, the media regulator, had raised some concerns with News Corp about the bid. The day after, Mrs Brooks wrote an email to Fréd Michel, News Corp's head of public affairs, saying "GO – total bafflement at response".

* She discussed the phone-hacking allegations with David Cameron on several occasions between 2009-11. He also phoned her to ask about it in October 2010. However, she claimed he had not raised the possible involvement of Andy Coulson, the former News of the World editor, in phone hacking at any time.

* Mr Cameron used to send her text messages signed off LOL until she pointed out that it stood for "Laughing out Loud" rather than "Lots of Love". However, she denied he texted her 12 times a day, saying it was more like once or twice a week.

* She received direct or indirect messages of support from politicians including Cameron, Osborne and former Prime Minister Tony Blair when she was forced to resign from News International in July 2011. Ms Brooks also said she received a message of support from the Home Office, which has a lead role in overseeing the prosecution of criminal activity relating to phone hacking.

But it is the emergence of an email to Ms Brooks from the News Corp lobbyist Fréd Michel, discovered on her Blackberry, which is most damaging for the Government. Sent on 27 June 2011, only a week before it emerged that journalists at the News of the World had hacked into the phone of the murdered teenager Milly Dowler, it suggests that ministers were colluding with News Corp executives to control the unfolding scandal.

It provides evidence News Corp had a secret back channel to what Jeremy Hunt was planning while making a decision on the BSkyB bid. He writes to Ms Brooks: "Hunt will be making references to phone hacking in his statement on Rubicon (the BSkyB deal) this week... This is based on his belief the police are pursuing things thoroughly and phone hacking has nothing to do with the media plurality issues."

He adds: "It's extremely helpful". Mr Michel then continues: "He wants to prevent a public inquiry (into hacking).

"JH is now starting to looking (sic) to phone hacking/practices more thoroughly and has asked me to advise him privately in the coming weeks and guide his and No. 10's positioning..."

At the time the email was sent, Mr Hunt was under pressure from Labour MPs to delay or refer the BSkyB bid because of the hacking scandal. Operation Weeting was identifying a growing number of victims and a week before News International had secretly passed documents to the police revealing apparent bribery of Met police officers. Despite this, Hunt essentially approved the News Corp bid, bar a few details, three days after the email was sent.

Sources close to Mr Hunt said he categorically denied telling News Corp he wanted to prevent a public inquiry, or asking the company to advise on how to handle the Government's response to phone hacking. The department said: "Jeremy Hunt will respond when he gives his evidence to Leveson. He is confident his evidence will vindicate the position that he has behaved with integrity on every issue. "It has already been made clear that when Fréd Michel has claimed in emails to be speaking to Jeremy Hunt that was not the case."

But Harriet Harman, Labour's Shadow Culture Secretary, said the email raised further worrying questions for both Mr Hunt and Mr Cameron.

"People will be disgusted at the prospect of Jeremy Hunt and No 10 colluding with News Corp to avoid a public inquiry into phone hacking."