London, July 8 (IANS) Former News of the World editor Andy Coulson was arrested Friday over allegations of phone hacking and corruption, BBC reported.

The arrest came at a time Prime Minister David Cameron defended his decision to give Coulson a "second chance" and employ him as his director of communications - a job he has left.

The premier announced two inquiries - one led by a judge - into the phone hacking allegations and newspaper ethics.

Coulson, 43, has denied any knowledge of phone hacking while he was NOTW editor.

Cameron said of Coulson: "I became friends with him and I think he did his job for me in a very effective way. He became a friend and he is a friend."

News International said it is shutting down the News of the World after this Sunday's edition following a spate of fresh revelations.

The 168-year-old tabloid is accused of hacking into phones of crime victims, celebrities and politicians. Police have identified 4,000 possible targets.

Cameron said the judge-led inquiry would look into "why did the first police investigation fail so abysmally; what exactly was going on at the News of the World, and what was going on at other newspapers?"

He also questioned the tenability of Rebekah Brooks as News International chief executive, considering she was editor of the News of the World at the time Milly Dowler's phone was being hacked, BBC reported.

In January 2007, the News of the World's royal editor Clive Goodman and private investigator Glenn Mulcaire were both jailed for plotting to intercept voicemail messages left for royal aides.

Coulson, who was the paper's editor at the time, said he took "ultimate responsibility" for the scandal, but he insisted he was unaware of any phone hacking by his journalists.

He was employed as Cameron's director of communications in 2007 but Guardian editor Alan Rusbridger claims he warned Cameron's team not to employ Coulson, the BBC said.

Cameron said he did not remember receiving "any specific action or information about Andy Coulson" but would check with his officials, it added.