The News of the World has been sacrificed after a series of increasingly damaging allegations left its reputation in tatters.
James Murdoch, chairman of publishers News International, said the 168-year history of Britain's best-selling newspaper will come to an end when the final edition is published this Sunday. A spokeswoman refused to comment on speculation that The Sun will now be published seven days a week.
The bombshell announcement came as advertisers deserted the News of the World in droves and police revealed 4,000 people may have had their phones hacked by the tabloid. The Royal British Legion dropped the News of the World as its campaigning partner and expressed "revulsion" at allegations that war widows' phones may have been hacked.
Mr Murdoch, the son of media mogul Rupert Murdoch, pulled the plug on the paper after claims that it paid private investigators to illegally intercept the voicemail messages of murdered schoolgirl Milly Dowler, bereaved military families and relatives of 7/7 bombing victims. It also stands accused of paying thousands of pounds illegally to corrupt police officers.
News of the World journalists reacted furiously, demanding to know why they are losing their jobs when News International chief executive Rebekah Brooks, the editor when hacking occurred, is keeping hers.
It also emerged that the Government's decision on whether to wave through Rupert Murdoch's proposed takeover of BSkyB could be delayed by several months after it received around 100,000 responses to its consultation process.
James Murdoch announced the News of the World was closing just after 4.30pm in a 950-word statement to staff, praising the paper's achievements but condemning the illegal activities. Mr Murdoch accepted that the paper made statements to Parliament "without being in the full possession of the facts" and said he wrongly approved out-of-court settlements with famous victims of hacking without having a "complete picture" of what had happened.
The spotlight will now intensify on Ms Brooks, who was editor of the paper when Milly's phone was allegedly hacked after she went missing in 2002. Dozens of MPs, including Labour leader Ed Miliband, have called for her to go and she reportedly offered to resign on Wednesday night. But James Murdoch praised her "very good" leadership and ethics, and added: "I am satisfied that she neither had knowledge of nor directed those activities."
The Guardian reported that former editor of the News of the World Andy Coulson will be arrested on Friday morning. The newspaper claims that he has been told to attend a central London police station for questioning over claims he knew about phone hacking. A second former senior journalist at the newspaper will also be arrested in the next few days, it reported.
Police have also told the father of a soldier killed in Afghanistan that they are setting up a new team to investigate allegations that journalists broke into email accounts. Anthony Philippson believes his son James's Hotmail account was illegally accessed in the days after he died in June 2006.