Chancellor George Osborne suggested hiring Andy Coulson at a private dinner with David Cameron over the head of the then chairman of the Conservative Party.
The wooing of Mr Coulson in 2007, when he had resigned as editor of the News of the World, following the jailing of the royal editor Clive Goodman and private investigator Glenn Mulcaire for phone hacking, occurred without the knowledge of the Conservatives' head of campaigning at the time, George Bridges.
Yesterday in the House of Commons, Mr Cameron tacitly admitted the role of Mr Osborne in hiring Mr Coulson, who was arrested two weeks ago on suspicion of bribing police officers and of phone hacking.
Mr Cameron was allegedly warned by The Guardian and by other politicians about hiring Mr Coulson in view of the questions about his editorship of the tabloid.
Asked whether Mr Osborne had been behind the idea to approach Mr Coulson and offer him the job of director of communications for the Tories - and later for the Government - Mr Cameron replied: "The Chancellor has many bright ideas but in the end this was my decision."
Initial discussions with Mr Coulson are believed to have taken place with Mr Osborne and Steve Hilton, Mr Cameron's chief strategist, who also moved to Downing Street with the Prime Minister.
Francis Maude, who was the Conservative Party chairman at the time, was only informed of the discussions after Mr Coulson's appointment had been approved in principle by the leader.
Mr Maude negotiated Mr Coulson's £275,000 salary.
Mr Bridges was told the identity of the party's new director of communications and planning once the appointment had been made.
He is understood to have protested about Mr Coulson's arrival.
Yesterday Mr Bridges, who now works for a public affairs consultancy, was unavailable for comment.
On Wednesday, Rebekah Brooks dismissed suggestions that she had advised Mr Cameron to make Mr Coulson his director of communications after he left the NoTW in 2007.
"I think it is a matter of public knowledge that it was George Osborne, the Chancellor's idea that when Andy Coulson left the News of the World they should start discussions with him on whether he [should] be the appropriate person to go into Tory headquarters," Ms Brooks told a Commons Select Committee.