The Independent on Sunday are saying that Rupert Murdoch personally guaranteed that Andy Coulson was safe to take on as his Downing Street press chief, the newspaper learnt yesterday, as the fallout from the News of the World phone-hacking scandal threatened to escalate into all-out war between the UK's two most powerful men.
Mr Cameron promised he would defend Mr Coulson's position. The IoS revealed that the cosy relationship between the Prime Minister, Mr Murdoch Snr, News International's chief executive Rebekah Brooks and Mr Coulson has been severely damaged by the hacking crisis, which caused the closure of the 168-year-old tabloid newspaper this weekend.
Mr Cameron faces serious questions over his judgement in appointing Mr Coulson, who was arrested on Friday by police investigating hacking and illegal payments to police officers. The Prime Minister said that he had sought assurances over the appointment in July 2007. Mr Murdoch Snr later gave Mr Coulson a clean bill of health, himself believing he was giving an accurate portrayal of his former editor.
Lord Ashdown, a key player as the Liberal Democrats agonised over whether to join in a coalition with the Tories, told the Observer newspaper that, based on what he had been told, it was obvious Coulson's appointment as Cameron's director of communications would be a disaster.
"I warned No 10 within days of the election that they would suffer terrible damage if they did not get rid of Coulson, when these things came out, as it was inevitable they would," he said.
The bigger picture here is the BSkyB takeover that would give the Murdoch family 40% of the media, this in terms of competition would be wrong, but until the police investigations into News International are over, in terms of the fit and proper test cannot be fulfilled.
Ed Miliband the Labour leader said today "I say this to the prime minister candidly. Over the next 72 hours I hope he changes his position on this, because I don't want to force this to a vote in the house of Commons, but I think he's got to understand that when the public have seen the disgusting revelations that we've seen this week, the idea that this organisation – which engaged in these terrible practices – should be allowed to get that 100% stake without the criminal investigation being completed and on the basis of assurances from that self-same organisation, I'm afraid that won't wash with the public."
So the ball is in the Prime ministers court and the Lib Dems who will have to choose who's side they are on?