David Cameron has admitted that he discussed News Corporation's takeover bid for BSkyB with James Murdoch while the Government was deciding whether to approve it.
The Prime Minister acknowledged his embarrassment at attending a party thrown by then News International chief executive Rebekah Brooks - where the conversation took place - and hinted that he regretted doing so in retrospect.
But he insisted there had been no "grand deal" with Rupert Murdoch's media empire to wave through the takeover in return for support from News International newspapers. He said: "It would be absolutely wrong for there to be any sort of deal and there wasn't. There was no grand deal."
The Prime Minister admitted discussing BSkyB with senior News Corp executive James Murdoch at a Christmas 2010 dinner at the Oxfordshire home of Mrs Brooks. Asked whether he was embarrassed that he was even at the party, Mr Cameron said: "Clearly, after all that's been written and said about it, yes of course one might do things differently."
The Prime Minister said he did not recall the exact details of his conversation with Mr Murdoch but that it concerned the recent controversy over Business Secretary Vince Cable's comments that he had "declared war" on News Corporation.
"What I recall saying, although I can't remember every detail of the conversation, is saying something like: clearly that was unacceptable, it was embarrassing for the Government, and to be clear from now on this whole issue would be dealt with impartially, properly, in the correct way, but obviously I had nothing to do with it, I recused myself from it," he told BBC1's Andrew Marr Show.
The Prime Minister offered qualified support for his under-fire Culture Secretary Jeremy Hunt, who is facing calls for his resignation over his handling of the BSkyB deal.
"As things stand, I don't believe Jeremy Hunt broke the ministerial code," Mr Cameron said, but added that he could yet order an independent investigation after the Culture Secretary has given evidence to the Leveson Inquiry.
Labour will on Monday demand that the Prime Minister comes before the Commons to make a statement on Mr Hunt and the ministerial code. Labour leader Ed Miliband believes Mr Cameron is failing to enforce the ministerial code and must explain himself to MPs.
A Labour source said: "David Cameron is still trying to hide behind the Leveson Inquiry. With Parliament breaking up on Tuesday, Mr Cameron must come to the Commons and explain to the British people why he is ducking his responsibilities to enforce the ministerial code."