Murdoch: News of the World to close after Sunday

The News of the World was sacrificed tonight after a series of increasingly damaging allegations left its reputation in tatters.

James Murdoch, chairman of publishers News International, said the 168-year history of Britain's best-selling newspaper would come to an end when the final edition is published this Sunday.

The bombshell announcement came as advertisers deserted the News of the World in droves and police revealed 4,000 people may have had their phones hacked by the tabloid.

Mr Murdoch, the son of media mogul Rupert Murdoch, pulled the plug on the paper after claims that it paid private investigators to illegally intercept the voicemail messages of murdered schoolgirl Milly Dowler, bereaved military families and relatives of 7/7 bombing victims. It also stands accused of paying thousands of pounds illegally to corrupt police officers.

News of the World journalists reacted furiously, demanding to know why they were losing their jobs when News International chief executive Rebekah Brooks, the editor when hacking occurred, was keeping hers.

Current editor Colin Myler said tonight: "This is the saddest day of my professional career. For 168 years the News of the World has been a huge part of many peoples' lives.

"Sundays without this great British institution will not be the same."

The shock closure came hours after the Royal British Legion dropped the News of the World as its campaigning partner and expressed "revulsion" at allegations that war widows' phones may have been hacked.

As the day went on more and more of Britain's biggest companies - among them Sainsbury's, O2 and npower - said they were pulling their advertising from the title.

It also emerged that the Government's decision on whether to wave through Rupert Murdoch's proposed takeover of BSkyB could be delayed by several months after it received around 100,000 responses to its consultation process.

James Murdoch announced the News of the World was closing just after 4.30pm in a 950-word statement to staff, praising the paper's achievements but condemning the illegal activities.

He said: "The good things the News of the World does, however, have been sullied by behaviour that was wrong.

"Indeed, if recent allegations are true, it was inhuman and has no place in our company."

Mr Murdoch admitted that the paper's internal inquiry into earlier phone hacking claims was inadequate.

News of the World royal editor Clive Goodman and private investigator Glenn Mulcaire were jailed in 2007 after plotting to intercept voicemail messages left for royal aides.

The publisher originally claimed that this was the full extent of the scandal, blaming a single rogue reporter.

Mr Murdoch accepted that the paper made statements to Parliament "without being in the full possession of the facts" and said he wrongly approved out-of-court settlements with famous victims of hacking without having a "complete picture" of what had happened.

He went on: "The News of the World and News International failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose.

"Wrongdoers turned a good newsroom bad and this was not fully understood or adequately pursued.

"As a result, the News of the World and News International wrongly maintained that these issues were confined to one reporter.

"We now have voluntarily given evidence to the police that I believe will prove that this was untrue and those who acted wrongly will have to face the consequences."

Mr Murdoch made it clear that some people would lose their jobs as a result of the paper's closure.

He told staff: "Many of you, if not the vast majority of you, are either new to the company or have had no connection to the News of the World during the years when egregious behaviour occurred. I can understand how unfair these decisions may feel."

This weekend's edition of the News of the World will have no commercial advertisements and all the revenue from sales will go to good causes.

The spotlight will now intensify on Ms Brooks, who was editor of the paper when Milly's phone was allegedly hacked by Mulcaire after she went missing in 2002.

Dozens of MPs, including Labour leader Ed Miliband, have called for her to go and she reportedly offered to resign last night.

But Rupert Murdoch yesterday backed her to continue as News International chief executive, and his son today praised her "very good" leadership and ethics.

James Murdoch said: "I am satisfied that she neither had knowledge of nor directed those activities."

Prime Minister David Cameron has ordered two public inquiries into the scandal, one looking at failings in the original police inquiry and the second examining the behaviour, practices and ethics of journalists and media organisations.

Meanwhile, detectives leading the phone hacking criminal investigation said they had identified more than 4,000 potential victims.

Scotland Yard also referred an investigation into payments to officers by the News of the World to the Independent Police Complaints Commission.

The development came after former deputy assistant commissioner Brian Paddick said some officers may have received up to £30,000 for giving information.

It also emerged that the News of the World may have targeted leading lawyer Michael Mansfield QC in an attempt to uncover stories about Diana, Princess of Wales.

Mr Mansfield, who represented the family of Diana's former lover Dodi Fayed at the inquest into her death, said he received a letter from Scotland Yard saying he was on a list of possible targets.

Media analysts said News International would probably try to hold onto the readership of the News of the World with a new Sunday title.

One option would be to publish the paper's daily sister title, the Sun, seven days a week.

The company will not be able to use the name Sunday Sun as this is the title of a regional paper in Newcastle.

But searches show that website names TheSunOnSunday.co.uk, TheSunOnSunday.com and SunOnSunday.co.uk were all registered two days ago.

James Murdoch was pictured leaving the Wapping site in a car at 8.30pm.

The Guardian reported that former editor of the News of the World Andy Coulson will be arrested tomorrow morning.

The newspaper claims that he has been told to attend a central London police station for questioning over claims he knew about phone hacking.

A second former senior journalist at the newspaper will also be arrested in the next few days, it reported.