Newspaper 'sacrificed to save one woman'

Staff rage as News of the World is closed over hacking scandal, while Rupert Murdoch refuses to comment on rumours of new Sunday paper

Rupert Murdoch announced the closure of the 168-year-old News of the World yesterday in a desperate attempt to limit the ongoing scandal over phone hacking, as the paper's former editor, Andy Coulson, prepared to be arrested.

The shock decision was revealed to staff at Mr Murdoch's News International newspaper in an email from his son James, the News Corp deputy chief operating officer, who said: "The News of the World is in the business of holding others to account. But it failed when it came to itself."

Journalists raged that they had been betrayed by Rebekah Brooks, News International's chief executive, who faces calls for her resignation, after revelations that the NOTW under her editorship hacked the phone of murdered schoolgirl Milly Dowler.

"Murdoch has sacrificed a newspaper to save one woman," said one member of the newsroom on a day of dramatic developments in the phone-hacking scandal. These include:

* Mr Coulson, David Cameron's former director of communications, is expected to be arrested and questioned over what he knew about phone hacking at the NOTW under his editorship;

* James Murdoch denied perverting the course of justice by authorising payments to hacking victims;

* The Government's decision on News Corp's proposed takeover of BSkyB is expected to be delayed once the consultation period closes later today;

* The Labour leader, Ed Miliband, signalled he will call for the Press Complaints Commission to be scrapped and replaced after failing to stop the hacking, labelling it a "toothless poodle";

* Major advertisers continued their exodus from the Sunday red-top, with Sainsbury's, Asda, O2, Boots, Specsavers, Dixons and npower joining companies such as Ford ;

* The Royal British Legion cut its ties with the paper over allegations that it hacked the phones of families of soldiers killed in Iraq.

Ms Brooks visited the newsroom, where she had a terse exchange with the editor Colin Myler, who will bring out the last edition of the paper this Sunday. It is understood she had discussed resigning with James Murdoch but that she did not make an offer to do so.

The final paper, which News International has decided will feature no advertising, will carry a large apology on its front page. The title – which once sold eight million copies a week – was sacrificed as Rupert Murdoch sought to stop the toxic publicity it has attracted.

James Murdoch said: "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 will prove that this was untrue and those who acted wrongly will have to face the consequences." He also admitted that the NOTW had given misleading evidence to MPs, saying: "The paper made statements to Parliament without being in the full possession of the facts. This was wrong."

Ms Brooks and James Murdoch are in charge of News International's operations at its headquarters in Wapping, east London, and both have been criticised heavily for their failure to uncover the extent of phone hacking.

Rupert Murdoch has a history of closing newspapers in Britain, having shut down Today, the last national title to fold, in 1996. News International confirmed yesterday that 200 members of staff would be invited to seek jobs elsewhere in the organisation.

In the NOTW newsroom, journalists saw the story flash up on television screens. Animosity was directed towards senior executives, with one member of staff describing Ms Brooks' role in the affair as "morally repugnant".

Mr Myler, who was appointed editor in 2007, with a brief to clean up the paper's reputation, reacted angrily to Ms Brooks' invitation for him to address staff. "I will say some words to my staff after you've gone," he is said to have told her.

Rumours were circulating last night that News Corp was planning to return to the Sunday tabloid market by launching The Sun as a Sunday newspaper and that Mr Murdoch had seized an opportunity to be rid of what had become a damaging brand, as well as making cost savings and improving efficiency. The name "Sun on Sunday" has been registered this week along with the domain name thesunonsunday. co.uk, observers noted.

Critics of News International's handling of the phone-hacking inquiry, including Lord Prescott and the Labour MP Tom Watson, were quick to dismiss the closure of the News of the World as a rebranding exercise, which would not draw a line under the affair.

Mr Watson said: "Rupert Murdoch did not close the News of the World. It [was closed by the] revulsion of families up and down the land. It was going to lose all its readers and it had no advertisers left. They had no choice."