Editor who quit over bugging scandal is new Tory spin chief

Mr Coulson resigned from the Rupert Murdoch-owned tabloid in February after its royal editor Clive Goodman was jailed for hacking into the voicemail of Prince William's aide.

In a move that triggered speculation Mr Murdoch is edging closer to the Tories, Mr Coulson was today confirmed as the party's new director of communications.

The move has been compared to the appointment of former Daily Mirror political editor Alastair Campbell as Tony Blair's spin supremo in the Nineties.

The Conservatives have struggled in recent months to find a suitable candidate to head their communications team. Other contenders believed to have been in the frame included the Independent's deputy editor Ian Birrell.

It is understood that Mr Coulson's links to shadow defence secretary Liam Fox played a part in his appointment.

Former Tory communications chief Nick Wood said: "Andy knows a hell of a lot about newspapers and the media and how they work. It is an imaginative appointment."

Mr Coulson is still seen as very close to Mr Murdoch because he resigned "honourably" over the royal bugging row.

Before the scandal broke, he was so highly rated by the News International proprietor that he was tipped for the editorship of the Sun. As editor, Mr Coulson was reportedly earning more than £300,000 a year and today Labour party sources suggested that his new salary would be substantial.

"With Mr Cameron's policy and branding chief Steve Hilton said to be earning £200,000, that could bring the cost of their spin team to half a million pounds a year," said one insider.

A former showbusiness reporter, Mr Coulson rose through the ranks at the Sun and won accolades for his editorship of the News of the World.

When he resigned he said he took "ultimate responsibility" for the phone hacking affair and said his reporter's actions were "entirely wrong".

Goodman was jailed at the Old Bailey after pleading guilty to illegally accessing voicemail messages, some left by Prince William. Mr Coulson, who edited the paper for four years, said at the time he "deeply regretted" what had happened.

"I also feel strongly that when the News of the World calls those in public life to account on behalf of its readers, it must have its own house in order," he said.