Rupert Murdoch's News Corporation will close its tabloid, News of the World, after this Sunday's edition, as a result of an escalating phone hacking scandal, James Murdoch said on Thursday.

"The News of the World is in the business of holding others to account," the deputy chief operating officer of News Corporation told staff of the 168-year-old newspaper.

 "It failed when it came to itself.”

"The good things the News of the World does ... have been sullied by behavior that was wrong. Indeed, if recent allegations are true, it was inhuman and has no place in our company."

News Corporation has been rocked in the last week by claims that its best-selling Sunday tabloid hacked in to the phones of relatives of British soldiers killed in action, of missing children and those caught up in the July 2005 London bombings.

Steven Barnett, professor of communications at Westminster University, said he was "gob-smacked" by the announcement.

 "Talk about a nuclear option," he told Reuters. "It will certainly take some of the heat off immediate allegations about journalistic behavior and phone hacking.”