RUPERT Murdoch last night bowed to pressure from a united British political establishment and withdrew his cherished pound stg. 8 billion bid to buy the UK’s top commercial broadcaster BSkyB.

In one of his biggest political defeats, the Australian-born proprietor abandoned what would have been the biggest and most lucrative takeover of his 58-year media career.

The decision came after all major UK political parties had agreed to a House of Commons motion urging Mr Murdoch’s news Corporation to drop the bid following revelations of criminal behaviour at his New of the World newspaper and an alleged cover-up by his British executives.

Prime Minister David Cameron said last night that he was launching a judicial inquiry into wrongdoing by the firm and by police officers, and pledged new transparency in all contacts between government leaders and media executives.

Mr Cameron said the powerful inquiry headed by Court of Appeal judge Brian Leveson would also change the media regulation landscape and look into cross-media ownership, a clear blow to the ambitions of Mr Murdoch, who already owns several newspaper and 39 per cent of BSkyB.

Mr Cameron’s aides said the promised reforms represented the end of a long era of cozy ties between powerful media players and senior politicians.

The biggest shake-up and inquiry in press and government relations in decades came as politicians who have long courted Mr Murdoch united against him for the unprecedented rebuff by the House of Commons.

Mr Cameron directed Conservative MPs to take the rare step of backing an opposition motion sponsored by Labour leader Ed Miliband that called on Mr Murdoch to abandon his bid for BSkyB.

Mr Cameron also agreed to check whether there was any evidence that phone hacking techniques by Mr Murdoch’s UK journalists had crossed the Atlantic and been used against victims of the 9/11 terror attacks in the US.

The dramatic developments came as News International confirmed that its top legal manager, Tom Crone, had left the company in recent days.

Mr Cameron said the chief executive of News International Rebekah Brooks should lose her job, after Mr Miliband said her continued tenure was an insult to the family of murdered schoolgirl Milly Dowler, whose phone was hacked while Ms Brooks was editor of the NOTW.

Mr Cameron said he wanted the see any wrongdoers punished no matter how senior they were.

“The people involved, whether they were directly responsible for wrongdoing, whether they sanctioned it or whether they covered it up, however high or low they go they must not only be brought to justice, they must also have no future role in running a media company in our country,” he said.

“I will be consulting the Cabinet Secretary on an amendment to the ministerial code to require ministers to record all meetings with newspaper and other media proprietors, senior editors and executives regardless of the nature of the meeting.

“Permanent secretaries and special advisers would also be required to record such meeting, this information will be published quarterly. It is as first for our country . . . and will help make the UK government one of the most transparent in the world.”

Mr Cameron had long argued that it would be improper and legally risky for him to directly oppose the corporate takeover, but scrambled last night to catch up to Labour and the balance-of-power Liberal Democrats in showing a willingness to take on Mr Murdoch.

Mr Cameron said Lord Justice Leveson would look into wrongdoing by police and journalists in the phone hacking scandal and would oversee a second conducted by a panel of experts into the future of media ethics and regulation.

The judge will have the power to force people to appear, and evidence will be given under oath by witnesses who could include former prime ministers Tony Blair and Gordon Brown.

Mr Cameron was striving to respond to public anger over evidence that NOTW had bribed police officers and hacked into telephone messages of murder victims and their families, and the failure of police to promptly investigate the issue.

Downing Street advisers were worried that Mr Cameron was politically vulnerable because of his close ties with News executives and his decision in 2007 to appoint as his communications director Andy Coulson, the former NOTW editor who was last week arrested over the scandal.

News International said it would fully co-operate with all inquiries but it had not confirmed last night whether it would comply with a request by a House of Commons committee to hear evidence next week from Mr Murdoch and his two top UK executives, his son James and Ms Brooks.