Former Editor of Scandalized News of the World Arrested

July 8, 2011— -- Britain's Prime Minister David Cameron is promising a massive investigation into the phone hacking and bribery allegations that have led to the collapse of one of Britain's oldest tabloids, "News of the World," after Cameron's former spokesman was arrested in connection with the scandal.

Andy Coulson, who was editor of "News of the World" while reporters broke the law, was also the chief spokesman for Cameron until January of this year. He was arrested at 10:30 a.m. in the U.K. for corruption allegations and conspiring to intercept communications. He was released later on police bail until October.

As Coulson was being questioned by the police, Cameron admitted that the press and politicians have had far too close a relationship for far too long. He called for a full investigation into the hacking and said that a new body must be created to regulate the press in place of the Press Complaints Commission.

Police today also arrested Clive Goodman, a former News of the World royal editor, on suspicion of making illegal payoffs to police for scoops. Goodman served time in jail in 2007 for hacking into the phones of royal aides. He, too, was released on bail until October.

"The truth is, we've all been in this together," Cameron said, blaming politicians and members of the press.

Press, 10 Downing Street Relationship

The relationship between 10 Downing Street and the press, particularly with magnate Rupert Murdoch, can be traced back decades to when the famed Iron Lady, Margaret Thatcher, was in office.

Thatcher allowed Murdoch to buy the Times and the Sunday Times in 1981, and News Corporation reportedly benefited from the government's decision to take on unions. Murdoch continued to woo whichever candidate had his best interests by holding special meetings. Tony Blair and David Cameron were both summoned to exotic places like Australia and Greece to meet with the tycoon.

When some politicians disagreed with Murdoch, they immediately felt the repercussions. When Labour Leader Neil Kinnock attacked Murdoch for his anti-union attitude, the papers turned against him, causing Conservative John Major to win a fourth term.

The press asked Cameron to take responsibility for hiring Coulson.

"He had resigned from 'News of the World.' He said at the time he didn't know what was happening on his watch," said Cameron to reporters. "He should have known what was happening on his watch. He paid the price and resigned."

While 200 people will lose their jobs when the newspaper closes its doors for good on Sunday, former editor Rebekah Brooks, who is now the chief executive of Murdoch's News International, will remain at her post.

Cameron stands by the fact that he is friendly with both Coulson and Brooks, despite the scandal surrounding their reputations.

Cameron said, though, that he would have accepted Brooks' resignation.

"It was reported she offered her resignation and in this situation I would have taken it," he said.

For now her outspoken boss, Murdoch, is standing by her. While he is in Idaho avoiding reporters, he can't avoid the reality that his empire has been exposed to allegations so shocking that despite its 168-year history he is shutting down "News of the World" for good.

"It is clear that 'News of the World' as owned and managed by Rupert Murdoch was a criminal organization," said Peter Oborne, the chief political commentator for the "Daily Telegraph."

The paper was hated by celebrities, politicians, even the royals for its relentless pursuit of sensational stories.

Different scandals, like when Sarah Ferguson, the Duchess of York, was caught selling access to Prince Andrew, or when David Beckham's "secret affair" was revealed in the pages of the "News of the World," all translated into huge profits for Murdoch.

That all changed this week as revelations that the paper's reporters hacked the voicemails of 4,000 people, not just celebrities, but also the families of a murdered teen, victims of a terrorist attack and British soldiers who died abroad.

Paul McMullen, a former reporter and editor at the paper, said that they would do anything to get a story.

"You had to get the story at all costs," he said. "Would you stop at doing anything to get a story? You would go and do anything."

There are even allegations that reporters at "News of the World" bribed police to get the latest scoop.

Murdoch may hope the scandal will disappear when he kills the paper, but that's not likely. Criminal investigations, public inquiries, and more arrests are expected to be underway.

The Associated Press contributed to this article.