Former Downing Street communications chief Andy Coulson has been released on police bail after being questioned over the phone hacking scandal and alleged corrupt payments to police officers.
Ex-royal editor of the News of the World Clive Goodman, 53, was also quizzed at a separate police station over claims officers were bribed. Both men were released on police bail until October. As Mr Coulson, 43, left Lewisham police station in south-east London, he said: "There is an awful lot I would like to say, but I can't at this time."
News Corporation chairman Rupert Murdoch plans to fly into London on Saturday to confront the crisis, according to the Financial Times.
Their arrests came as chief executive of News International Rebekah Brooks sought to reassure News of the World staff about what will happen next after the company decided to shut the paper. She spoke to journalists and pledged to find as many of them as possible jobs within the company in the wake of the closure.
In a recording of Brooks talking to staff, leaked to Sky News, she said she wanted to "fight and get this paper's reputation back", and insisted that her resignation would not have prevented the newspaper's closure. "You think I should have resigned because we'd never have to close the News of the World. It's just not true."
She appeared to hint that more revelations will be made, telling staff: "We have more visibility perhaps on what we can see coming our way that you guys can, and look I can only, I'm tied because of the criminal investigation in what I can say, but I think in a year's time every single one of you in this room might come up and say 'OK, well I see what you saw now'." Ms Brooks added: "Eventually it will come out why things went wrong and who was responsible and that will be another very difficult moment in this company's history."
The Prime Minister came under fire for an "appalling error of judgment" in his appointment of former News of the World editor Mr Coulson as his director of communications. David Cameron explained his reasons for giving Mr Coulson a "second chance" in a hastily convened press conference at No 10. He said he took "full responsibility" for the appointment but insisted he had commissioned a firm to carry out a background check beforehand.
Labour leader Ed Miliband claimed Mr Cameron's aides were handed a wealth of information warning them about practices Mr Coulson was involved in while editor of the News of the World. He said: "Putting it right for the Prime Minister means starting by admitting the appalling error of judgment he made in hiring Andy Coulson, apologising for bringing him into the centre of the Government machine, coming clean about what conversations he had with Andy Coulson, before and after his appointment, about phone hacking."
News International on Friday night denied claims that police are investigating suspected deletion of emails by an executive at the company. The Guardian reported that Scotland Yard is probing claims that a member of staff deleted "millions of emails" from an internal archive.