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Detectives searched Coulson’s house in London and Goodman’s home south of the city in Surrey on Friday, as well as the newsroom of a second tabloid, the Daily Star Sunday. That paper is owned by Richard Desmond’s Northern & Shell media conglomerate, and Goodman has done work for the paper since his release from jail.

The Daily Star Sunday said detectives spent two hours at its offices and took away a disc containing a record of Goodman’s computer activity. The paper said there was “no suggestion whatsoever” that Goodman acted improperly during his time at the Star.

Late Friday, police announced that a third suspect, a 63-year-old man from Surrey, had been arrested for alleged payments to police and they were searching his home. His name was not released.

Allegations of phone hacking by the News of the World first surfaced more than five years ago, but the original police investigation _ which saw Goodman and another man jailed _ has now been criticized as incomplete and compromised by new bribery allegations.

The Metropolitan Police reopened the hacking inquiry earlier this year, and say they are looking at the names of over 4,000 people as possible victims.

Cameron, realizing that the crisis was knocking at his 10 Downing St. door, moved quickly to distance himself from it. Like predecessors including Labour Prime Ministers Gordon Brown and Tony Blair, Cameron courted the powerful Murdoch empire, whose endorsement is considered capable of swinging elections.

And he’s not the first prime minister to hire a former journalist as his top communications aide _ Blair’s powerful aide Alastair Campbell also had a tabloid background.

On Friday, Cameron acknowledged that British politicians and the press had become too close and promised investigations into both the tabloid’s actions and future media regulation.

“The truth is, we’ve all been in this together,” Cameron told reporters at a hastily arranged news conference. “Party leaders were so keen to win the support of newspapers that we turned a blind eye to the need to sort this issue. The people in power knew things weren’t right but they didn’t do enough quickly enough.”

Coulson quit as editor of News of the World after Goodman and private investigator Glenn Mulcaire were jailed in 2007 for hacking into the phones of royal aides. Coulson maintained he knew nothing of the hacking, and was hired soon after as Cameron’s director of communications, but resigned in January as it became clear the hacking at the tabloid had been widespread.

Opposition Labour Party leader Ed Miliband had urged Cameron to apologize for “the appalling error of judgment he made in hiring Andy Coulson.” Cameron refused, saying Friday that Coulson remained a friend, but clearly moved a further step away from his former aide.

“(Coulson) gave me assurances,” Cameron said. “He said he had resigned because of what had happened, but he didn’t know the hacking had taken place.”

“I took a conscious choice to give someone who had screwed up a second chance,” Cameron said. “He worked for me, he worked for me well, but actually he decided in the end the second chance wouldn’t work, he had to resign all over again for the first offense.”

Cameron said press self-regulation by the Press Complaints Commission had failed and a new body, independent of the media and the government, was needed to properly enforce standards.

Cameron also suggested Brooks, who is a personal friend, should have resigned as chief executive of News International. He said there were also questions to be answered by James Murdoch, the heir-apparent to his father’s media empire.

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