Murdochs, Coulson sink deeper in mire after letters bared

James Murdoch, head of News International, the UK arm of News Corp, admitted on Tuesday that his company paid ''hush money'' to a phone hacking victim - although he had told a select committee of Parliament earlier that they didn't try to buy his silence.

Murdoch conceded that Gordon Taylor, chairman of the Professional Footballers' Association, was paid around £700,000 in 2008 in return for signing a confidentiality agreement.

However, he continued to deny he authorised the payment, though the committee warned him that the case could expose further phone hacking at the News of The World if it became public.

Murdoch also admitted that News International paid Clive Goodman, the already convicted former correspondent of the now defunct News of the World, almost £250,000 after his employment was terminated.

Clive Goodman was given £90,503 in April 2007, three months after he was jailed for his part in tapping the phones of the Royal family. He was later given a further £153,000 and £13,000 for legal fees.

A letter written by Goodman four years ago but published only on Tuesday is likely to lead to embarrassing new allegations of dishonesty against News Corp boss Rupert Murdoch, his son James, and their former editor Andy Coulson.