News International's beleaguered chief executive Rebekah Brooks has resigned.
The former Sun and News of the World editor announced she was standing down in an internal email to staff at the company, which also publishes The Times and Sunday Times
Ms Brooks, 43, said she quit to avoid distracting attention from News International's efforts to "fix the problems of the past".
She became a focus for criticism of the company's journalistic practices after it emerged that the News of the World hacked into murdered schoolgirl Milly Dowler's phone while she was editor of the Sunday tabloid.
Ms Brooks wrote in her email to staff: "My desire to remain on the bridge has made me a focal point of the debate.
"This is now detracting attention from all our honest endeavours to fix the problems of the past.
"Therefore I have given Rupert and James Murdoch my resignation. While it has been a subject of discussion, this time my resignation has been accepted."
Labour frontbencher Chris Bryant, who has been a leading critic over the phone-hacking scandal, said Ms Brooks should have left before.
"I think it is right that she goes. I think she should have gone a very long time ago," he told Sky News. "Frankly, she should have gone when she said she had paid police officers for information back in 2003."
He added: "I thought it was disgraceful when the newspaper last week was closed as a way of trying to protect Rebekah Brooks and then Mr Murdoch saying that she was his priority.
"It felt like those in the boiler room were carrying the can for those who were really at the helm of the ship."
Ms Brooks's message continued: "At News International we pride ourselves on setting the news agenda for the right reasons. Today we are leading the news for the wrong ones.
"The reputation of the company we love so much, as well as the press freedoms we value so highly, are all at risk.
"As chief executive of the company, I feel a deep sense of responsibility for the people we have hurt and I want to reiterate how sorry I am for what we now know to have taken place."
Her resignation comes despite Mr Murdoch describing her as his first priority when he flew into London on Sunday to take charge of the crisis engulfing his media empire.
Ms Brooks said she would now concentrate on "correcting the distortions and rebutting the allegations" about her record as a journalist, an editor and executive.
She said her resignation would allow her the time to give her full co-operation to the police investigation into phone hacking and police bribes, the judge-led inquiry into the scandal, and her appearance before the Commons Culture Media and Sport Committee on Tuesday.
Ms Brooks used her farewell message to praise Rupert Murdoch's "wisdom, kindness and incisive advice" and his son James's "great loyalty and friendship".
"I have worked here for 22 years and I know it to be part of the finest media company in the world," she wrote.
"News International is full of talented, professional and honourable people. I am proud to have been part of the team and lucky to know so many brilliant journalists and media executives. I leave with the happiest of memories and an abundance of friends."
Ms Brooks first offered her resignation to the Murdochs last week as News International took the decision to axe the News of the World, it is understood.
Prime Minister David Cameron said last week that he would have have accepted her resignation if it was up to him.
"It has been reported that she offered her resignation over this and in this situation I would have taken it," he said.
Meanwhile, the investigation into criminal behaviour by journalists at Rupert Murdoch's News Corp crossed the Atlantic yesterday as the FBI opened an inquiry into claims that the News of the World tried to hack the phones of victims of the 9/11 terrorist attacks.
As News Corp's shares slid in New York and legal problems threatened to engulf the rest of his media empire, Mr Murdoch launched a vigorous defence of his own handling of the scandal and of the conduct of his son, James.
The FBI opened the inquiry after sustained pressure from both Republican and Democrat politicians, who expressed outrage at the claims that 9/11 victims could have been among the NOTW's targets. The FBI is following claims first made in the Daily Mirror at the start of this week that NOTW journalists contacted a former New York police officer, now working as a private investigator, and offered to pay him to retrieve the phone records of those killed in the 2001 terrorist attacks. Police sources said the investigation is at a preliminary stage.