·  'News International has entered the criminal underworld,' says Tom Watson MP

·  Accusations Murdoch and Brooks knew about destruction of information at a facility in India

·  Police looking into NotW links to the Madeline McCann and Danielle Jones investigations

·  Call for David Cameron to be removed from public inquiry decisions

Rupert Murdoch's media empire was accused of 'entering the criminal underworld'.

The allegations against Mr Murdoch's son James and his most senior UK executive Rebekah Brooks were made by an MP on the floor of the Commons as the phone hacking scandal rocked police, media and political establishments.

In an emergency Commons debate, James Murdoch, chairman of News Corporation Europe, was accused of engaging in an attempt to pervert the course of justice by paying hush money to hacking victims.

More accusations: Tom Watson called for James Murdoch and Rebekah Brooks to be suspended

Questions: Allegations were made against Rebekah Brooks by an MP on the floor of the Commons

Mrs Brooks, meanwhile, was accused of ignoring warnings from police a decade ago that staff on the News of the World, which she then edited, were breaking the law.

Ex-Labour minister Tom Watson used Parliamentary privilege to call for police to investigate alleged attempts to destroy incriminating News International email evidence held at a storage facility in Chennai, India.

'We know now that News International had entered the criminal underworld,' Mr Watson told MPs.

Government sources said it was likely there would now be two inquiries - one into the activities and regulation of the media, which could be announced within weeks, and a later probe into the specifics of the phone hacking allegations, which would not commence until police inquiries are complete.

But last night the full extent of Mrs Brooks' alleged knowledge of criminal activity nearly a decade ago became clear.

According to The Guardian, she was summoned to a meeting at Scotland Yard in January 2003 where she was told that one of her most senior journalists, Alex Marunchak, had apparently agreed to use photographers and vans leased to the paper to run surveillance on behalf of Jonathan Rees and Sid Fillery.

They were two private investigators who were suspected of murdering their former partner, Daniel Morgan.

The Yard saw this as a possible attempt to pervert the course of justice.

More accusations: Yvette Cooper said David Cameron should be removed from the process because of his links to Andy Coulson

Miss Brooks was also told of evidence that Marunchak had a corrupt relationship with Rees, who had been earning up to £150,000 a year selling confidential data to the paper.

Police told her a former employee of Rees had alleged that some of these payments were diverted to Marunchak.

The Guardian claimed that surveillance of Detective Chief Superintendent David Cook involved the News of the World physically following him and his young children, ‘blagging’ his personal details from police databases, attempting to access his voicemail and that of his wife, and possibly sending a ‘Trojan horse’ email in an attempt to steal information from his computer

Debate leader: Labour MP Chris Bryant said the News of the World has systematically lied to Parliament

The targeting of Cook began following his appearance on BBC Crimewatch on 26 June 2002, when he appealed for information to solve the murder of Morgan, who had been found dead in south London 15 years earlier. Rees and Fillery were among the suspects.

A few days later, Cook was contacted by police and told somebody claiming to work for the Inland Revenue had asked for his home address.

It is now known that at that time, the News of the World’s investigator, Glenn Mulcaire, succeeded in obtaining Cook’s home address, his internal payroll number at the Met, his date of birth and figures for the amount that he and his wife were paying for their mortgage.

Mulcaire obtained the mobile phone number for Cook’s wife and the password she used for her mobile phone account.

About a week later, The Guardian says today, a van was seen parked outside Cook’s home.

The following day, two vans were seen there. Both of them attempted to follow Cook as he took his two-year-old son to nursery.

Cook alerted Scotland Yard and both vans were found to be leased to the paper.

Scotland Yard chose not to mount a formal inquiry. Instead a senior press officer contacted Mrs Brooks to ask for an explanation.

She told them they were investigating a report that Cook was having an affair with another officer, Jacqui Hames, a presenter on BBC Crimewatch

Attorney General: Dominic Grieve warned a public inquiry would not make progress until after the criminal investigation is completed

Rees and Fillery were eventually arrested and charged in relation to the murder of Morgan. Charges against both men were later dropped.

During the debate there were also calls for the Prime Minister David Cameron to be removed from the decision making process in any public inquiry because of his close links to former News of the World editor Andy Coulson, who then became his head of communications at 10 Downing Street.

David Cameron was linked to the scandal by Yvette Cooper, the Shadow Home Secretary, who said his relationship with Andy Coulson compromised his impartiality.

Cooper said there were rumours circulating that the reason Coulson resigned from Downing Street was because he knew of the existence of the newly-uncovered emails.

She then called for Mr Cameron to remove himself from all decisions regarding the public inquiry.

She said: 'These emails were passed to police on 20th June, even though the inquiry and NI's co-operation started on 26th of January.

'Was Andy Coulson aware of this and did he tell the Prime Minister or No.10 about these emails?

'If he did it means members of the Government were aware of this before the police.

'The Prime Minister needs to provide some immediate answers to this question. Should the Prime Minister now remove himself from any decision making about this public inquiry?

'This inquiry needs to be impartial and it cannot be compromised by any perception of partiality in the ministers in charge of those decisions.'

The debate was led by Labour MP Chris Bryant who began the three-hour session by saying that News International had 'completely lost sight of any idea of decency'.

Ford, Virgin and Halifax are among the firms that have pulled out of advertising in the News of the World

He claimed Parliament had been 'systematically lied to' by the newspaper and a 'very dirty smell' also surrounded the police's handling of the original inquiry, he added.

Mr Bryant told MPs: 'I think a lot of lies have been told by a lot of people.'

With the anniversary of the 7/7 terror attacks tomorrow, Mr Bryant said the families of victims were among those targeted.

He added: 'In addition, I am told that police are looking at not just Milly Dowler's phone and those of the families of Holly Wells and Jessica Chapman, but the case of Madeleine McCann and 15-year-old Danielle Jones who was abducted and murdered in Essex in 2001 by her uncle Stuart Campbell.'

He continued: 'Scandalously, it also seems that the News of the World targeted some of those police officers who were at various times in charge of the investigation into the News of the World itself.

'We can only speculate why they would want to do that.'

Mr Bryant told MPs: 'These are not just the amoral actions of some lone private investigator tied to a rogue News of the World, they are the immoral and almost certainly criminal deeds of an organisation that was appallingly led and had completely lost sight of any idea of decency or shared humanity.

Allegations: The paper is also said to have hacked into the phones of the families of murdered Soham schoolgirls Holly Wells and Jessica Chapman

'The private voicemail messages of victims of crime should never, ever have become a commodity to be traded between journalists and private investigators for a cheap story and a quick sale and I know that the vast majority of journalists in this country would agree with that.'

Prime Minister David Cameron has given his backing for an inquiry, but has insisted that the police investigation should be allowed to conclude before it can fully begin.

Mr Bryant challenged that idea and stressed it was necessary to begin as soon as possible, with hearings in private if necessary to avoid prejudicing criminal proceedings.

Attorney General Dominic Grieve said: 'I certainly note the comments you have made about the ability or the possibility of setting the inquiry up, but it may not make much progress until the criminal investigations are over.'

Mr Bryant, who is taking legal action against the newspaper over claims his phone was hacked, said: 'The journalists and private investigators should be ashamed of what happened.

'But so too should those who ran the newspaper. It is simply no excuse to say that they did not know what was going on

News of the World is alleged to have hacked and deleted messages from Milly Dowler's phone while she was still missing

'Managerial and executive negligence is tantamount to complicity in this case.'

He then called for News International's chief executive Rebekah Brooks, a former editor of the News of the World, to quit.

'I believe that if Rebekah Brooks had a single shred of decency she would now resign.

'God knows, if it were a minister who was in the spotlight at the moment she would be demanding their head on a plate.'

But Mr Bryant stressed the News of the World 'was not the only magician in the dark arts' and the 'whole of the political system' failed to take action.

Turning to the Met's 2006 investigation, which led to the conviction of private investigator Glenn Mulcaire and the News of the World's royal editor Clive Goodman, Mr Bryant said: 'The police secured a vast amount of information.

'They could have, and I believe should have, interrogated that information so that it became evidence.

'They could have approached all those who were affected.

'They could have contacted the mobile phone companies to ensure that their customers were better protected.

'Unfortunately they did none of those things.'

One senior Labour MP urged the public to boycott companies that continue to advertise in the News of the World.

Shadow home office minister Clive Efford said consumers should refuse to do business with firms that 'do not stand side by side with the ordinary person in the street'.

A string of companies have pulled their advertising from the Sunday newspaper amid public anger over the phone hacking scandal, including Halifax, Virgin Holidays, Ford, Vauxhall and the Co-operative Group.

Mr Efford, speaking from the back benches, commended those firms who had pulled their adverts from the NotW in light of the new allegations.
But he said it was 'not good enough' that some companies had chosen to wait for the outcome of the police inquiry.

He added: 'I say to the people that may be purchasing goods from those organisations or thinking about buying a new mobile phone - if these companies do not stand side by side with the ordinary person in the street who is outraged at what has gone on in News International, then they should not trade with those companies.

'Because it's only by ordinary people making a stand that we stop these rich people - rich people who have invaded the lives of ordinary people in the street to make themselves even richer and make themselves even more powerful - only by hurting them where it really does matter, in their profits, will the ordinary person in the street influence their behaviour in the future.'