News Corporation Withdraws Bid For BSkyB

A senior source who had been working on the offer told Sky's City editor Mark Kleinman the situation had become "too politicised" for News Corp to move forward.

"My disclosure that News Corp had withdrawn its interest in taking over BSkyB feels, with hindsight, like an inevitability given the escalating scandal," commented Kleinman.

The announcement came just hours before MPs were expected overwhelmingly to back a Labour motion condemning the takeover plans.

The decision was later confirmed by the media group, which said the "current climate" prevented a further approach.

Prime Minister David Cameron welcomed the announcement, saying: "I think this is the right decision.

"I have been saying that this company clearly needs to sort out the problems there are in News International and at the News Of The World - that must be the priority, not takeovers.

"So, the right decision but also the right decision for the country too. We have now got to get on with the work of the police investigation and the public inquiry that I have set up."

Labour leader Ed Miliband described the decision as "a victory for people up and down this country who have been appalled by the phone hacking scandal".