News International has announced the closure of The News of the World as the scandal surrounding phone hacking intensifies.

Staff at the paper were "devastated", Jules Stenson, head of features at the newspaper, told reporter Tom Bateman.

"There wasn't a lynch mob mentality," he said. "There was utter shock and bewilderment."

Political editor Nick Robinson said that David Cameron, who is holding a press conference at 9.30am, knows that this is "the third great crisis of trust" in the UK following MP expenses and banking crisis.

"This is one of the defining moments of the Cameron premiership," he said.

Analysing whether the scandal would derail the News International take-over of BSkyB, Business editor Robert Peston said that culture secretary Jeremy Hunt is not able to take it into account in the decision.

"All of this changes nothing in terms of the takeover," he said. "But the climate of political and public opinion is such... that the government can't simply stand on the side-lines."