LONDON (AFP) ? Rupert Murdoch on Wednesday condemned as "deplorable and unacceptable" claims that his News of the World newspaper hacked the phones of relatives of murdered children and victims of the London bombings.
In his first statement on the affair, the Australian tycoon said his company would "fully and proactively co-operate with the police".
Prime Minister David Cameron earlier Wednesday backed calls for a public inquiry into the allegations, but said police should first complete its probe of the "absolutely disgusting" claims.
Ahead of an emergency debate in the House of Commons, Cameron said: "We do need to have an inquiry, possibly inquiries, into what has happened.
"Let us be clear -- we are no longer talking here about politicians and celebrities, we are talking about murder victims, potentially terrorist victims having their phones hacked into.
"It is absolutely disgusting what has taken place."
He admitted questions needed answering on why an initial police probe in 2006 failed to uncover the latest claims, and on media ethics and practices.
But Cameron rejected calls by opposition Labour leader Ed Miliband for an immediate public inquiry "because you must not jeopardise the police investigation".
Cameron also refused to back Miliband's call for the resignation of Rebekah Brooks, the chief executive of News International who was editor of the News of the World when the hacking allegedly took place in 2002.
And he insisted the row should not affect the government's decision, due within days, on whether Murdoch's News Corp. should be able to proceed with its controversial bid to take full control of satellite broadcaster BSkyB.
Britain's best-selling Sunday paper has been dogged by claims of phone hacking since its royal editor and a private investigator were jailed for the practice in 2007, with fresh allegations sparking a new police investigation in January.
Most of the victims identified so far have been politicians and celebrities, but it has now emerged that relatives of those killed in the July 7, 2005 attacks on the London transport network were also targeted.
Graham Foulkes, whose son David died in the attacks, told the BBC it was "just horrendous" to think someone had been listening to his calls.
Police said the parents of Holly Wells and Jessica Chapman, two 10-year-old girls murdered in Soham, eastern England, in 2002, may also have been targeted.
The most shocking revelation was that journalists hacked the voicemail of murdered teenager Milly Dowler after her disappearance in 2002, and even deleted some messages, potentially disrupting the police investigation.
Simon Greenberg, News International's director of corporate affairs, told BBC radio it was "very close" to establishing who hacked Dowler's phone.
British press watchdog the Press Complaints Commission (PCC) said Wednesday it would conduct a review of "all aspects of press regulation" in light of recent developments.
As major companies including Ford and Mitsubishi withdrew their advertising from the tabloid over the scandal, Murdoch stepped in to limit the damage and give Brooks his full support.
"Recent allegations of phone hacking and making payments to police with respect to the News of the World are deplorable and unacceptable," he said.
"I have made clear that our company must fully and proactively co-operate with the police in all investigations and that is exactly what News International has been doing and will continue to do under Rebekah Brooks' leadership."
In an email to staff on Tuesday, Brooks said she was "sickened" by the new allegations and said it was "inconceivable" she had sanctioned the hacking.
Meanwhile a related scandal was brewing over Andy Coulson, a former News of the World editor who worked as Cameron's director of communications until he resigned in January.
Police said Wednesday they had evidence suggesting journalists had illegally paid police officers for information. Reports suggest Coulson was editor at the time, although he has always denied wrongdoing.
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