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LONDON (Reuters) - British police have launched a new investigation into claims journalists on one of its best-selling tabloids had been hacking into phones of high-profile figures.
The probe could have major political implications and industry consequences, in particular for the British arm of Rupert Murdoch's News Corp which owns the News of the World newspaper at the centre of the scandal.
In 2005, London's Metropolitan police launched an investigation into claims that journalists had been eavesdropping on the voicemail messages of aides to Britain's Prince William and his brother Harry. The probe culminated in the arrest and conviction of the News of the World's royal reporter Clive Goodman and a private detective Glenn Mulcaire.
At the time it was reported that the duo had also targeted a small number of other people.
Andy Coulson, who had been a high-flier within Murdoch's media empire, quit as the paper's editor in 2007 but denied any knowledge of the hacking.
Months later, Coulson was appointed media chief for the Conservative Party, which was then in opposition.
The News of the World said Goodman was a rogue reporter and no one else at the tabloid was aware of his activities.
In July 2009, the left-leaning Guardian newspaper reported that News International, the British subsidiary of News Corp, had paid 1 million pounds ($1.59 million) to settle court cases brought by victims of the phone hacking.
The Guardian said there were far more people affected by the tapping than originally believed, including a former deputy prime minister, celebrities and other public figures.
The report led to calls for a further police probe, but London's Metropolitan Police said they would not reopen their inquiry and that tapping had only occurred in a small number of cases.
In Sept. 2009, Les Hinton, one of Murdoch's most senior executives, told a committee of lawmakers phone hacking was not widespread and only involved Goodman. He said they had carried out a wide review and found no new evidence.
The committee later issued a report in Feb. 2010 accusing bosses at the News of the World of suffering "collective amnesia" and saying it was "inconceivable" they had not known about the hacking.
The issue resurfaced again in Sept. 2010, when the New York Times, citing former News of the World journalists, ran a story saying reporters had openly used the snooping tactic and it had been endorsed by editors.
It led police to review their evidence and interview Coulson, now Prime Minister David Cameron's communications chief, but prosecutors and detectives concluded there was nothing to warrant any new probe or charges.
However, the News of the World suspended senior editor, Ian Edmondson after he was named in court papers brought by actress Sienna Miller, one of a number of figures taking legal action over the phone hacking.
Two weeks later Coulson announced he was quitting, saying the coverage was too much of a distraction but again stating he had not known about the hacking.
On Wednesday, Edmondson was sacked and police announced they would launch a new investigation into phone hacking.
Opposition politicians have long criticised Cameron for choosing Coulson to run his media team, saying it reflected badly on the prime minister's judgment.
Critics have also suggested that Coulson's appointment showed an unhealthy relationship between Cameron and Murdoch, whose British tabloids were strong supporters of the Conservatives in last year's election.
Murdoch is currently waiting to hear if the government will clear its planned $12 billion buyout of TV operator BSkyB or refer the deal to competition authorities, with opponents saying he already has too much power in the British media sector.
The new police probe might not just scrutinise the News of the World, amid claims that reporters from other papers were involved in the eavesdropping practice.
Critics argue their original investigation was not thorough enough, subsequent new information was not dealt with seriously and victims of the hacking were not told they had been targeted.
They also want to know why the police failed to uncover the evidence which led to Edmondson's sacking.
Some have suggested detectives enjoyed too close a relationship with the News of the World, and were fearful of upsetting the government, after being heavily criticised for previous investigations into political figures.
Senior officers have denied the claims, saying they did not have the evidence to justify further probes. They promise the new investigation will be robust.
They also say that victims could not be given details of the criminal inquiry to be used in possible civil cases without a court order.
Editing by Sonya Hepinstall