Sienna Miller, who is suing the News of the World for hacking into her mobile phone voicemail messages, is one of 24 public figures given an 'unreserved apology' by the paper's parent company, News International. Photograph: Graham Whitby Boot/Sportsphoto Ltd/Allstar
Rupert Murdoch's News International has issued a public apology to eight victims of phone hacking, including the actor Sienna Miller and former culture secretary Tessa Jowell, and admitted for the first time that the practice was rife at the News of the World.
In a move likely to cost the company many millions of pounds, it said it would offer compensation to some of the 24 high-profile figures who have started legal proceedings against the paper in the high court for breach of privacy. It also admitted its previous investigations into hacking had not been "sufficiently robust".
The unprecedented statement of contrition is a remarkable volte face for the country's most powerful news organisation that was claiming until the start of this year, in the face of growing evidence to the contrary, that hacking was the work of a single reporter.
It comes as a Scotland Yard investigation into phone hacking gathers pace. The News of the World's chief reporter, Neville Thurlbeck, was questioned by police on Tuesday, as was Ian Edmondson, who was sacked as associate editor (news) in January. The company said it had decided to offer an "unreserved apology" in certain cases but it would continue to fight others, including claims brought by Steve Coogan and the jockey Kieren Fallon.
"Past behaviour at the News of the World in relation to voicemail interception is a matter of genuine regret," it said. "It is now apparent that our previous inquiries failed to uncover important evidence and we acknowledge our actions then were not sufficiently robust."
At least one of the victims indicated privately that she was unlikely to accept News International's offer, although others – including Miller – are believed to be considering the proposal.
Lord Prescott, who is suing the Metropolitan police over its handling of the original 2006 phone-hacking inquiry, said: "The NoW has now admitted mass criminality." He repeated his call for Murdoch's bid for BSkyB to be blocked until the hacking allegations have been investigated fully.
The eight people to be offered compensation, likely to be an estimated £100,000 each, include Joan Hammell, one of Prescott's former advisers, and Jowell's estranged husband, David Mills. Jowell was the minister responsible for media policy at the time of the alleged hackings.
The others are football agent Sky Andrew, Andy Gray, who was sacked as a Sky Sports presenter this year, publicist Nicola Phillips and Kelly Hoppen, the interior designer who is Sienna Miller's stepmother.
News International insiders said more offers are certain to follow. The action is an attempt to prevent further damaging revelations about hacking at the paper emerging in the course of court hearings, the first of which is due in the autumn.
Over the next few weeks, NI will be forced to hand over hundreds of internal emails sent by reporters and executives relating to Miller and Andrew in order to comply with a high court order. They could reveal how much senior executives at the paper knew about the activities of Glenn Mulcaire, the private investigator who worked for the NoW.
Asked at a New York media conference about the damage hacking has inflicted on the company, Rupert Murdoch's son James, who was promoted last week to become the third most powerful executive in his father's media empire, said it had isolated the issue.
He said: "What we were able to do is really put this problem into a box. If you get everybody sucked into something like that, then the whole business will sputter which you don't want."
But Rod Dadak, of law firm Lewis Slikin, said dozens of potential victims would now scramble to launch legal claims in the expectation of receiving generous payouts. That could leave NI facing a bill of up to £40m. "The admission of liability is just the beginning," he said. "The list of people who will now claim their phone may have been hacked will grow immeasurably."
Evidence seized from Mulcaire by the Met suggests that he targeted more than 3,000 people on the instructions of executives at the paper.
MP Simon Hughes was one of the original hacking victims named in the indictment against Mulcaire and Clive Goodman. He said yesterday: "It was always obvious that other people must have been involved in the phone hacking and other victims must have had their privacy invaded. It is in the public interest that we get to the bottom of this."
Andrew Neil, an ex-Murdoch executive who edited the Sunday Times for a decade, said: "This is one of the most embarrassing apologies I've ever seen from a major British corporation. I don't think NI had anywhere else to go. The evidence was piling up against them. It may cost them a lot more than they think. There are plenty of other people involved. They are trying to close it down with their chequebook but I don't think they're going to succeed."
Charlotte Harris, of Mishcon de Reya, who represents Andrew, said: "An admission from the News of the World is something we've been working towards for years now. They persisted with their 'one rogue' defence for far too long. It was clear for a very long time that the practice of phone hacking was rife and that the News of the World should take responsibility. I hope these apologies do not come at the cost of finding out precisely what happened and who was responsible for covering it up."