London: Britain's raging phone hacking scandal, where money was swapped for scoops, on Friday prompted Prime Minister David Cameron to promise sweeping changes in press regulations, as a former editor of the collapsed tabloid 'News of the World' was arrested.

Cameron, whose former communications director Andy Coulson was arrested on Friday, also vowed to launch a full investigation into the scandal that has shaken the British media like never before.

Cameron said the existing laws had failed to prevent malpractices that led to the collapse of the country's largest selling tabloid and instituted two inquiries. While one public inquiry will look into the phone-hacking scandal, the other will make recommendations on ethics and culture of the press.

The Press Complaints Commission, seen to be ineffectual, is likely to be scrapped soon.

Calling the phone-hacking scandal a 'cathartic moment and a crisis', Cameron said the press regulations in Britain, probably the oldest in the world, had failed and a new body, independent of the government and the news industry, was needed to regulate the media.

Personally embarrassed by his closeness with media magnate Rupert Murdoch and his executives, Cameron said in a candid press conference on Friday that ‘we are all in this together’, and blamed both politicians and press for the mess.

Coulson's arrest took place while Cameron was defending his decision to hire him while announcing the setting up of two inquiries to look into the scandal and its ethical implications for British journalism.

UK scribe may be nabbed

A former editor of the News of the World is currently facing arrest over charges of phone hacking' even as reports emerged that Sunday's edition would be the last of the 168-year-old paper.

Andy Coulson ‘43’ has been asked to present himself at a police station in Central London. He could also face a perjury -investigation over his testimony during the trial of a Scottish MP, who was jailed for lying in a defamation case against the News of the World' said a media reported.

Coulson is also expected to be quizzed by police over claims that journalists under his watch made secret payments to police officers.

Sources said another former senior journalist will also be arrested.

Coulson quit the daily in January 2007 just weeks before royal editor Clive Goodman and private investigator Glenn Mulcaire were jailed for phone hacking.

The News of the World ordered Mulcaire to hack into voicemail messages left on a mobile phone belonging to a murdered teenager' Milly Dowler' in 2002', a newspaper reported.

Mulcaire may also have targeted relatives of British servicemen killed in Afghanistan and Iraq.

Media mogul Rupert Murdoch bought the newspaper in 1969 and made his foray into British journalism.

His son James told the 200 British staff that Sunday's edition of the paper' which sells 2.6 million copies a week' would be its last.

'The good things the News of the World does... have been sullied by behaviour that was wrong. Indeed' if recent allegations are true' it was inhuman and has no place in our company'' James Murdoch was quoted as saying by a newspaper.

'The News of the World is in the business of holding others to account. But it failed when it came to itself'' he said.