The phone-hacking scandal that has enveloped one of Britain's best-read tabloid newspapers - and put a journalist in jail - has reached 10 Downing Street, threatening to taint other newspapers and rock Rupert Murdoch's TV expansion plans.
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Five years after Scotland Yard began investigating Buckingham Palace's suspicion that Prince William's voicemail had been hacked, the British Prime Minister, David Cameron, has lost Andy Coulson, his chief PR man and former editor of the News of the World , as a long list of celebrities, led by the actor Sienna Miller, prepare civil lawsuits in a move to unmask other newspaper executives who authorised hacking.
Coulson quit as rumours spread of the existence of hundreds of tapes, recorded by a senior News of the World journalist.
Coulson had resigned from the paper in January 2007, the day his royal editor, Clive Goodman, and a private investigator, Glenn Mulcaire, were jailed for breaking into the message banks of royal aides. News International, the Murdoch-owned publisher of the paper, has always said the hacking was the work of one rogue reporter. Cameron appointed Coulson to his team a few months later, in April 2007, and the police investigation that followed sparked no further action.
But suspicions that phone hacking was far more prevalent have been pursued by a parliamentary committee as allegation after allegation surfaced that a host of journalists and editors were aware of the illegal practice. The committee demanded a list of names of editors and The Guardian has also continued its investigations. Last month, an assistant editor at the News of the World, Ian Edmondson, was suspended and a fresh police investigation of the claims began.
The re-emergence of the scandal has come at a difficult time for News International and Murdoch as he prepares to buy the remaining 61 per cent of the satellite broadcaster BSkyB in a £7.5 billion ($12 billion) deal. When news of the plan broke mid-last year, rival media outlets, including The Guardian, exploded, arguing that the media group would dominate the British media landscape even further: News already controls a third of national newspaper circulation and has a broadcasting arm with a turnover of £5.9 billion, compared with the BBC's £4.8 billion.
As debate about media diversity intensified, the phone-hacking scandal took on a different dimension, sparking questions about the Conservative-led government's relationship with the Murdoch empire in view of strong editorial support from the mass-circulation The Sun for the Tories at the last election.
The flurry of rumour, however, crystallised in black and white at the weekend in the wake of Coulson's resignation. Some commentators, including Tim Montgomerie, editor of the conservativehome blog, said straight out that the media mogul had pushed his former executive to resign amid rising fears that the scandal risked damaging the BskyB negotiations.
Montgomerie's tweet said: ''Twas Murdoch who ordered Coulson to go. In Ldn this week the NewsCorp boss knew Coulson at PM's side was driving focus on his papers.''
Ultimately, the final green light lies with the Culture Secretary, Jeremy Hunt, who critics complain has already said on the record that he does not believe the BSkyB deal will result in a ''substantive change'' in media plurality.
However, he has also been given a report by the media watchdog, Ofcom, believed to recommend that the decision be handed to the Competition Commission for adjudication.
Whatever unfolds in the next few weeks, the News of the World scandal is far from over.
An A-list of stars, footballers and celebrity publicists are lining up to find out if Mulcaire worked exclusively for the Murdoch tabloid. If he did not, the storm will make interesting reading indeed.
