The announcement comes as New International's legal manager, Tom Crone, steps down after 20 years with the company, as reported by Legal Week, and as News Limited announces an audit of its expenditures.

Heading the tabloid phone-hacking inquiry, which will include an investigation into the wrongdoing of the press and police, as well as a full review of the regulation of the press, Leveson will be assisted by a panel of senior independent figures with expertise in media, broadcasting, regulation and government.

The inquiry, due to report back within 12 months, will have the power to summon witnesses including newspaper reporters, management, proprietors, policemen and politicians of all parties to give evidence in public.

Speaking to the House of Commons on 13 July, the Prime Minister said the inquiry should be "as robust as possible and get to the truth fastest and get to work the quickest".

Cameron also announced changes to the ministerial code stating that ministers will be required to record and publish details of all their meetings with newspaper and other media proprietors, senior editors and executives.