News Corp. says it will close its 168-year-old U.K. tabloid News of the World, a dramatic bid to cap a scandal centered on the paper's controversial reporting tactics in pursuit of racy scoops. 
 
 News Of The World was known for years of hard-hitting investigations, exposure of wrongdoing, campaigning - and a hefty dose of celebrity gossip. Video courtesy of Sky News. 
 
 The paper, which appears on Sundays, is accused of improperly intercepting voice mails of everyday people, including a 13-year-old murder victim, as well as those of celebrities. 
 
 James Murdoch, News Corp.'s deputy chief operating officer, told staff Thursday that News Corp. had decided to close the tabloid because the allegations—if true—were "inhuman" and had no place in the company. He said the paper's reputation had been "sullied by behavior that was wrong." 
 
 The paper is one of Britain's sauciest and most storied tabloids, and was a key building block in the global media empire created by News Corp. Chairman and Chief Executive Rupert Murdoch, who purchased it in 1969. News Corp. also owns The Wall Street Journal. 
 
 News of the World became the U.K.'s best-selling Sunday paper with a righteous, no-holds-barred approach to taking down the rich and famous, from politicians to soccer stars. That style both appealed to the U.K.'s working class and titillated sophisticates who bought it as a guilty pleasure. 
 
 View Slideshow Agence France-Presse/Getty Images Chief executive of News International, Rebekah Brooks. 
 
 The paper has been under immense pressure for five years amid investigations into the use of private detectives to break into the mobile-phone voice mail of celebrities and political leaders. 
 
 The public rebuke reached a new level this week with the allegation that, in 2002, the paper accessed the voice mail of an abducted 13-year-old girl who, it turned out, had been murdered. Other allegations then surfaced of hacking into phones tied to other child-murder victims, as well as the families of war dead and of victims of 2005 terrorist attacks in London. 
 
 A person familiar with the matter said James Murdoch proposed the closure to his father earlier this week, and the idea was pursued immediately. 
 
 "The News of the World is in the business of holding others to account," the younger Mr. Murdoch said. "But it failed when it came to itself." He said the final News of the World would be published Sunday. 
 
 The controversy thrusts the younger Mr. Murdoch, believed to be a contender to eventually run News Corp., to the front and center of crisis management. 
 
 A sense that the paper had betrayed its readership was evident in London on Thursday night. Kandice Kameka, an office manager who works near the paper's offices, said she bought the paper "depending on what was on the front page—how good the gossip was." But she added: "When I found out about the tapping with the murder victim I was just gobsmacked—I didn't want anything to do with it after that....They just have no respect for people." 
 
 News of the World, Through the Years View Slideshow Getty Images A printer studied a front page proof in 1953. View Graphics Read All About It Key dates in the paper's past View Graphics 
 
 The recent uproar has threatened one of the most important business transactions on News Corp.'s plate, its proposed buyout of the 60.9% of British Sky Broadcasting Group PLC that it doesn't already own. 
 
 Before this week, the company was poised to finally receive regulatory approval for that proposal after an arduous 13-month effort; now that approval may be delayed, and it is unclear whether the deal itself will wind up as collateral damage in the News of the World scandal. 
 
 Analysts said the closure of News of the World would have a trivial impact on News Corp.'s finances. The paper accounts for significantly less than half of News Corp.'s U.K. publishing operations, which are valued at about $1.3 billion, or 2.8% of News Corp.'s current market cap, according to a person familiar with the matter. News Corp. shares rose almost 2% on the Nasdaq Stock Market Thursday before finishing at $17.43, down four cents. 
 
 Closing the paper by no means will shut down the scandal that has engulfed News Corp.'s U.K. newspaper operations. The company still faces a thicket of criminal investigations, civil lawsuits and new government and police probes that could take years to run their course. 
 
 News Corp. said it would close its News of the World weekly tabloid after a phone-hacking scandal, with this coming Sunday's edition the newspaper's last. 
 
 Executives of News Corp. believe more arrests are likely, according to people familiar with the matter. On Thursday night, the Guardian newspaper said Andy Coulson—a former News of the World editor who later became an aide to Prime Minister David Cameron—was told by police to present himself for arrest on Friday on suspicion of offenses related to phone hacking during his time as editor. Mr. Coulson didn't respond to a request for comment. 
 
 The situation has led to calls for the resignation of Rebekah Brooks, the chief executive of News International, News Corp.'s U.K. newspaper unit, who so far has received the backing of the elder Mr. Murdoch as well as his son. 
 
 Ms. Brooks was News of the World's editor until 2003, during the time of the alleged hacking of the murdered girl's phone. Since then, she has become one of the elder Mr. Murdoch's top lieutenants. 
 
 The latest revelations unleashed a political storm that prompted Mr. Cameron—a friend of Ms. Brooks—to call for new investigations into the paper's reporting tactics, the failures of the police and British media practices in general. Late Thursday, Downing Street officials were quick to say Mr. Cameron had nothing to do with the move to shut the paper. 
 
 Ed Miliband, the leader of the opposition Labour Party, said that Ms. Brooks should still step down. "I don't think News International can hope to start moving on and deal with these issues while she remains in place," he said. 
 
 Ms. Brooks declined to comment through a spokeswoman. 
 
 News Corp.'s move to close News of the World—which has an average circulation of 2.7 million, according to tracking organization ABC—brought sharp criticism from the U.K.'s National Union of Journalists. It is one of News Corp.'s four major U.K. newspaper titles, the others being the Sun, the Times and Sunday Times, but its circulation has been declining in recent years. 
 
 Michelle Stanistreet, the union's deputy general secretary, said a handful of staffers from the tabloid's sister paper, the Sun, left work in solidarity with their News of the World colleagues on Thursday, but that no strikes were planned. She said the closure was an attempt to divert attention, and the younger Mr. Murdoch should have fired Ms. Brooks instead. 
 
 News International said Thursday that some of the paper's 200 staff members may be laid off. But some may be transferred to other titles. 
 
 News Corp. may not be without a Sunday tabloid in the U.K. for long: people familiar with the matter said it has considered adding a Sunday edition to the six-days-a-week Sun, which attracts a similar audience as News of the World. The company could also simply launch a new paper with a different name. 
 
 "We don't know if this is anything more than a bit of PR management," said Tamsin Allen, a partner at law firm Bindmans LLP representing alleged phone-hack victims. "It's not really until we see heads rolling that we can be convinced that the company is taking this sufficiently seriously." 
 
 The phone-hacking scandal dates back to 2005, when Prince William's staff first alerted authorities to the possibility that the News of the World had hacked phones connected to the prince, sparking a police inquiry. 
 
 An initial police investigation into the newspaper resulted in two successful prosecutions that led to prison terms for the paper's royal-family correspondent, Clive Goodman, and Glenn Mulcaire, a private investigator hired by the tabloid. 
 
 Mr. Coulson, News of the World's editor at the time, resigned from his post in 2007, saying he took responsibility for the hacking that occurred on his watch but stating that he didn't know about it. The scandal reignited after new information surfaced in civil suits and the police reopened their criminal investigation. 
 
 —Alistair MacDonald, Natalia Rachlin and Jessica E. Vascellaro contributed to this article. 
 
 Write to Paul Sonne at paul.sonne@wsj.com, Cassell Bryan-Low at cassell.bryan-low@wsj.com and Russell Adams at russell.adams@wsj.com ||||| Rupert Murdoch (center) attempts to speak to the media after he held a meeting with the parents and sister of murdered school girl Milly Dowler in London, Friday, July 15, 2011. / AP Photo/Kirsty Wigglesworth 
 
 Last Updated 2:30 p.m. ET 
 
 LONDON  Rupert Murdoch met with the family of murdered schoolgirl Milly Dowler, whose phone was hacked by the now-defunct tabloid News of the World, and offered "a full and sincere apology," a lawyer for the family said. 
 
 Revelations that journalists had accessed Dowler's phone in search of information for news stories while her family and the police searched in vain for the missing girl - later found dead - inflamed the long-simmering phone hacking scandal involving Murdoch's News of the World, which was shut down last week. 
 
 Dowler family lawyer Mark Lewis said Murdoch appeared humbled and had offered "a heartfelt and what seemed to be a very sincere apology, telling them that the events that transpired at the tabloid were not in keeping with the standards set out when his own father entered the media industry. 
 
 "I don't think somebody could have held their head in their hands so many times and said that they were sorry," Lewis said. 
 
 The 80-year-old mogul emerged from the meeting at a London hotel to catcalls of "shame on you" from hecklers. He said that "as founder of the company I was appalled to find out what had happened and I apologized." 
 
 Murdoch's tone was dramatically different to that in an interview published Thursday in the Wall Street Journal, in which he said the company had made only "minor mistakes" and had handled the crisis "extremely well in every way possible." 
 
 Murdoch added that he was "getting annoyed" at all the negative headlines. 
 
 Rebekah Brooks resigns amid hacking scandal 
 
 Hacking scandal casts light on Murdoch politics 
 
 Special section: Murdoch in crisis 
 
 The meeting came hours after Murdoch released a copy of an apology that will be printed this weekend in British newspapers. 
 
 The ad signed by Murdoch says News International is "deeply sorry for the hurt" caused to phone-hacking victims. It adds that, "we regret not acting faster to sort things out." 
 
 Above: Sally Dowler (left), Gemma Dowler and Bob Dowler walk from the One Aldwych Hotel as their attorney Mark Lewis (right) looks on, after meeting with News Corp. Chairman Rupert Murdoch, July 15, 2011 in London. (Peter Macdiarmid/Getty Images) 
 
 Also today, the head of Murdoch's British newspaper operation resigned, becoming the highest-ranking casualty yet in the phone-hacking scandal roiling Britain. 
 
 BBC News quotes Dowler attorney Lewis as calling the resignation of Rebekah Brooks - editor of the newspaper at the time - as "poetic justice." 
 
 Brooks, chief executive of Murdoch's embattled U.K. newspapers and his loyal lieutenant, resigned today. As she departed, Murdoch's son James signaled a new strategy for dealing with the storm that has knocked billions off the value of News Corp., scuttled its ambitions to take full control of lucrative British Sky Broadcasting, and radically changed the power balance between U.K. politicians and the feared Murdoch press. 
 
 A new chief executive untainted by the U.K. problems, Tom Mockridge, 55, was installed to replace Brooks at News International, the local unit of Rupert Murdoch's global News Corp. media empire. Mockridge, a New Zealander who has served as a spokesman for the Australian government, joined News Corp. in 1991 and has been in charge of Sky Italia since 2003. 
 
 The moves come after News Corp. brought in Edelman Communications to help with public relations and lobbying. 
 
 But with two U.K. police investigations running as well as an FBI review into the possible hacking of the phones of 9/11 victims, it remains far from clear what happened, what may yet be revealed or which of the proliferating allegations of wrongdoing circulating among Britain's papers is really true. 
 
 Murdoch had defended the 43-year-old Brooks in the face of demands from British politicians that she step down, and had previously refused to accept her resignation. He made an abrupt switch, however, as News Corp. struggled but failed to contain the crisis. 
 
 BNET: Murdoch Dumps Loyal Lieutenant  Next Step: Redemption! 
 
 Brooks was editor of the News of the World tabloid between 2000 and 2003, when the paper's employees allegedly hacked into the phone of 13-year-old murder victim Milly Dowler in 2002 as police searched for her, potentially interfering with the police investigation. 
 
 That report last week provoked outrage far beyond any previous revelations of snooping on celebrities, politicians and athletes. In quick succession, Murdoch closed the 168-year-old News of the World and abandoned his bid for full BSkyB ownership. Prime Minister David Cameron then appointed a judge to conduct a sweeping inquiry into criminal activity at the paper and in the British media. 
 
 Brooks said the debate over her position as CEO of News International  the British arm of News Corp.  was now too much of a distraction. 
 
 "I have believed that the right and responsible action has been to lead us through the heat of the crisis. However my desire to remain on the bridge has made me a focal point of the debate," Brooks said in an email Friday to colleagues that was released by News International. "This is now detracting attention from all our honest endeavors to fix the problems of the past." 
 
 Yet Brooks hinted last week that there was more to come. 
 
 "We have more visibility perhaps with what we can see coming our way than you guys can," she told staff at News of the World as they prepared their last edition. 
 
 "I am tied by the criminal investigation but I think in a year's time, every single one of you in this room might come up and say 'OK, well, I see what she saw now,"' she said, according to a recording obtained by Sky News. 
 
 The comments Friday by James Murdoch, who heads the international operations of the New York-based News Corp., were an abrupt shift in tone from an interview his father gave Thursday to The Wall Street Journal  another Murdoch paper. Rupert Murdoch had said that News Corp. management had handled the crisis "extremely well in every way possible" save for a few "minor mistakes." 
 
 Brooks has been in charge of News International's four  now three  British newspapers since 2007, following a four-year stint as editor of the market-leading daily tabloid, The Sun. Just a week ago, she faced 200 angry employees at the News of the World who had lost their jobs as she kept hers when Murdoch shut down the paper. 
 
 The news of her resignation was greeted with relief by British politicians. 
 
 "It is right that Rebekah Brooks has finally taken responsibility for the terrible events that happened on her watch, like the hacking of Milly Dowler's phone," said opposition Labour Party leader Ed Miliband. "No one in this country should exercise power without responsibility." 
 
 Cameron, who had called for Brooks to step down, said she had made "the right decision," said Steve Field, the prime minister's spokesman. 
 
 Saudi Prince Al-Waleed bin Talal Alsaud, the second-largest News Corp. stockholder, told the BBC on Thursday that if Brooks were found to be implicated in wrongdoing by the newspapers "for sure she has to go. " 
 
 Brooks has agreed to answer questions next week from a U.K. parliamentary committee. Rupert and James Murdoch initially resisted, but also agreed to appear after the committee issued formal summonses to them. 
 
 Being hauled before a hostile group of legislators marks a rapid change of fortune for the 80-year-old Murdoch, long accustomed to being courted by prime ministers and other politicians scared of provoking the wrath of his editors. 
 
 "Murdoch is like a beast or a god. He can attack you and destroy you or he can give you great power and glory," Lord Maurice Glasman said Friday in a House of Lords debate. "He was outside the constraints, outside of law. He makes and breaks kings." 
 
 British police have arrested seven people in their investigation of phone hacking, and two others in a parallel investigation of alleged bribery of police officers for information. Police say they have recovered a list of 3,700 names  regarded as potential victims  but so far have been in touch with fewer than 200 people. 
 
 News Corp. shares were down 1.3 percent at $15.78 in early New York trading.
– Mired in an ever-deepening phone hacking scandal, Rupert Murdoch's 168-year-old News of the World will fold after Sunday's edition, reports the Wall Street Journal. "If recent allegations are true, it was inhuman, and has no place in our company," James Murdoch said in a statement announcing the closure of the vaunted British tabloid. The younger Murdoch said that the paper had now "voluntarily given evidence to police" of widespread wrongdoing, and that "those who acted wrongly will have to face the consequences."