17 August 2011 Last updated at 05:21 ET

Q&A: News of the World phone-hacking scandal

British tabloid the News of the World has closed after 168 years in circulation

The row over phone-hacking by journalists has led to the closure of the News of the World newspaper, and wider questions about press regulation, media ownership, the police, and relationships between politicians and journalists.

The BBC takes a look at the key questions it poses.

How did the scandal arise?

The News of the World (NoW) has been illicitly hacking into the voicemail messages of prominent people to find stories.

It admitted intercepting voicemails in April after years of rumour that the practice was widespread, and amid intense pressure from those who believed they had been victims.

One NoW journalist, royal editor Clive Goodman, was jailed for four months in January 2007, while private investigator Glenn Mulcaire was jailed for six months, after admitting intercepting voicemail messages on royal aides' phones.

The paper ceased publication on 10 July 2011 after fresh allegations. The final edition signed off with headline "Thank you and goodbye" and included an apology.

What was the NoW?

A national Sunday tabloid newspaper published in the UK, famed for celebrity scoops - selling an average of 2.8m copies. Its fondness for sex scandals gained it the nickname "News of the Screws".

The NoW was published by News Group Newspapers, part of News International, which is a subsidiary of Rupert Murdoch's News Corporation.

Claims that Milly Dowler's phone was hacked were described as "truly dreadful" by the prime minister

Who is alleged to have been hacked?

Police have a list of 4,000 possible targets. Among them are celebrities, sport stars, politicians and victims of crime.

They include actor Hugh Grant, publicist Max Clifford, comedian Steve Coogan, actress Sienna Miller, Lord Prescott, London Mayor Boris Johnson, football pundit Andy Gray and ex-footballer Paul Gascoigne.

Murdered teenager Milly Dowler and the parents of murdered Soham schoolgirls Holly Wells and Jessica Chapman were allegedly targeted. Sara Payne, whose Sarah's Law campaign for better child protection regulations was championed by the NoW after her eight-year-old daughter was murdered in 2000, has been told her details may have been held by Glenn Mulcaire. Relatives of dead UK soldiers and relatives of 7/7 victims may also have had their phones hacked.

There also allegations that a police officer offered to sell NoW a contacts book containing details of the royals and their staff.

How did the NoW hack phones?

Mobile phones used to come with a default four-digit Pin. Customers were expected to change their Pin, but very few did.

Tabloid journalists and private investigators could ring the number and if the caller didn't answer, enter the default Pin and access the person's messages.

Sienna Miller took legal action after her phone was hacked by NoW

Why did the NoW hack phones?

For exclusive stories.

Competition is fierce among the national press and, under intense pressure, it is alleged reporters pushed legal boundaries.

How do we know who was being hacked?

The jailing of Goodman and Mulcaire stemmed from a NoW story published in November 2005 about Prince William suffering a knee injury.

Detectives recovered files from Mulcaire's home which referred to a long list of public figures and celebrities.

In 2009, the Guardian newspaper claimed NoW journalists had hacked the phones of up to 3,000 celebrities, politicians and sports stars. Police confirmed the names of some of the suspected victims. Other figures claiming to have had their phones hacked have spoken to the media.

Why does phone hacking matter?

It is against the law. If NoW bosses authorised phone hacking then they could face charges.

But the scandal also prompts wider questions about press regulation and ethics, media ownership, the police, and relationships between politicians and journalists.

What are the victims doing about it?

Several cases have been settled in the courts. Sienna Miller won £100,000 damages and Andy Gray received £20,000. Max Clifford brought a private case and received a reported settlement of £700,000.

Other victims are awaiting the outcome of police investigations or have also launched legal action.

Heather Mills claims a Mirror Group journalist admitted hacking her phone

Were other papers involved in phone-hacking?

Questions have been raised about the conduct of journalists at the Trinity Mirror group of newspapers. The group, which publishes titles including the Daily and Sunday Mirror, Daily Record and People, says all its journalists work within the law.

However, a journalist who worked at the Sunday Mirror in the last decade has told the BBC they witnessed routine phone hacking in the paper's newsroom.

Model Heather Mills has alleged that a senior Mirror Group journalist admitted hacking her voicemails after quoting passages verbatim.

Meanwhile, former Daily Mirror editor Piers Morgan has denied that comments he made in previous newspaper and radio interviews amounted to an admission he knew about phone hacking at the paper.

He says he has never hacked a phone, told anyone to do so or knowingly published a story obtained via phone hacking.

What is the history of the police investigation?

The Metropolitan Police has faced criticism for their initial inquiry in 2006 into phone hacking at the paper.

In 2009 the Met chose not to relaunch their investigation, despite the Guardian's claims. In July 2011 Scotland Yard Assistant Commissioner John Yates expressed "extreme regret" for the decision.

In January 2011 the Met did re-open the investigation. On the same day the NoW sacked Ian Edmondson, an assistant editor, when e-mails relating to phone hacking were allegedly found on the newspaper's systems.

Those arrested and bailed by police as part of the new investigation have included Mr Edmondson, NoW chief reporter Neville Thurlbeck, senior NoW journalist James Weatherup, freelance journalist Terenia Taras, an unnamed 63-year-old man, ex-NoW editor Andy Coulson and ex-NoW royal editor Clive Goodman and former News International chief executive Rebekah Brooks.

Met chief Sir Paul Stephenson quit amid criticism for hiring an ex-NoW executive as an advisor

In July senior Met officers appeared before the Home Affairs Select Committee and told MPs that News International had tried to "thwart" the original inquiry into phone hacking at NoW.

Also in July, Metropolitan Police Commissioner Sir Paul Stephenson resigned following criticism for hiring former News of the World executive Neil Wallis - who was questioned by police investigating hacking - as an adviser.

Sir Paul said his links to the journalist could hamper current investigations.

The following day, Met Police Assistant Commissioner John Yates resigned from his post after growing pressure on him. He checked the credentials of Neil Wallis before the Met employed the former News of the World executive.

Mr Yates said his conscience was clear and had "deep regret" over his resignation.

On 30 July Scotland Yard announced that it had set up a team of officers to investigate computer hacking in relation to the activities of the News of the World. Operation Tuleta has been reviewing allegations of breaches of privacy received since January 2011 but now some of these allegations are moving to a full investigation.

How is hacking linked to alleged payments to police?

Commentators and victims accused the police of a lack of will to investigate hacking because officers were too close to the media.

At the beginning of July, News International handed over e-mails which were said to show payments were made to police in return for information, and they were alleged to have been authorised by Mr Coulson.

Met Commissioner Sir Paul Stephenson said a small number of officers were alleged to have taken illegal payments, and if true, they would face a criminal court.

Former NoW editor Rebekah Brooks has stepped down as chief executive of News International

What has the government done?

The prime minister has announced two inquiries and said the Press Complaints Commission should be scrapped.

Lord Justice Leveson is conducting a two-part inquiry, initially looking at "the culture, practices and ethics" of the UK media and its relationships with police and politicians. It will later examine the extent of unlawful conduct within newspaper groups and the police's original phone-hacking investigation.

Former Parliamentary Commissioner for Standards Elizabeth Filkin is also to examine the relationship between the media and police.

The government, and the previous Labour administration, had been accused of being slow to react to the scandal.

After the Guardian's claims in 2009, the House of Commons Culture, Media and Sport Select Committee interviewed News International bosses, including Mr Coulson, over the hacking accusations.

In its report in February 2010, the committee accused NoW of "collective amnesia" over phone hacking but MPs found no evidence bosses were aware of hacking.

How has News International responded to the scandal?

Rebekah Brooks, editor of the NoW at the time of the alleged hacking of Milly Dowler's phone, has resigned from her job as chief executive of News International.

Les Hinton, one of the top executives of Rupert Murdoch's News Corporation, has also quit.

Mr Hinton, former chief executive of the media group's Dow Jones, was head of News International from 1995-2007, a period in which the NoW was hacking phones.

Les Hinton was head of News International between 1995 and 2007

News Corp boss Rupert Murdoch issued an apology for the "serious wrongdoing" by the NoW, in UK national newspaper adverts.

News International initially put Goodman's conviction down to the work of one "rogue reporter".

But in April it admitted hacking was used and issued an apology. It has made several payouts.

The company has welcomed an inquiry and said it was co-operating with the police investigation.

On 19 July 2011, Rupert Murdoch, James Murdoch and Rebekah Brooks gave evidence to the House of Commons Culture, Media and Sport Select Committee and denied knowing the full extent of the allegations until evidence in civil cases was requested in late 2010.

Mrs Brooks said the company had then acted "quickly and decisively" in dealing with phone-hacking.

Rupert Murdoch said he had "clearly" been misled by some of his staff, while James Murdoch said the company was "determined to put things right".

James Murdoch also told the committee he had not been "aware" of an email suggesting hacking went beyond a single "rogue" reporter. Two former News of the World executives later issued a statement claiming they had informed him of the email but Mr Murdoch responded by saying he stands by his testimony.

A letter from Goodman, which alleges senior NoW figures knew what was going on, was released by MPs on 15 July 2011.

The former NoW royal editor wrote the letter to News International as he appealed against his dismissal in 2007. In it, he said hacking was "widely discussed" at the paper and that he had been promised his job back if he did not implicate others in court.

What about Andy Coulson?

Andy Coulson blamed coverage of the phone-hacking story for his resignation

Mr Coulson was editor when Goodman and Mulcaire were convicted. He resigned, saying he took responsibility for something that had happened on his watch.

But in November 2010 detectives interviewed Mr Coulson as a witness - and two months later he quit his post at Downing Street, citing coverage of the scandal.

In July this year he was arrested and police searched his south London home.

These events led to questions about the judgement of David Cameron. Asked if he had "screwed up" on the decision to employ Mr Coulson, Mr Cameron said: "People will decide."

Also in July, Sean Hoare, a former News of the World journalist who made phone-hacking allegations against the paper, was found dead.

Mr Hoare had told the BBC's Panorama that phone hacking was "endemic" at the newspaper and that Andy Coulson, then its editor, had asked him to hack phones - something Mr Coulson has denied.

What about BSkyB?

News Corporation owns 39% of broadcaster BSkyB, and Rupert Murdoch wanted to take over the remainder of the company.

But following the phone-hacking scandal News Corp announced it was dropping its planned bid.

MPs from all parties welcomed the decision, with Labour leader Ed Miliband calling it "a victory for people up and down this country who have been appalled by the revelations of the phone hacking scandal and the failure of News International to take responsibility".

The BBC's business editor Robert Peston, who broke the story, said it was a "huge humiliation" for News Corp.