Analysis: What has Jeremy Hunt done and can he survive?

James Murdoch's extraordinary evidence session at the Leveson inquiry has left media secretary Jeremy Hunt on the brink. Can he survive?

What has Hunt done?

Jeremy Hunt, the culture, media and sport secretary, was handed responsibility for News Corp's BSkyB bid after Vince Cable was caught boasting about being "at war with Murdoch" to undercover journalists.

Before he was even handed the file he was already on good terms with News Corp officials. But even as he held a quasi-judicial role in the process, information was being regularly communicated by his staff to the media company.

The key figure is Frédéric Michel, News Corp's public affairs executive. The evidence from Leveson came from a stack of emails from Michel to James Murdoch. In them, he appears to be receiving highly confidential information from George Osborne's special adviser, Rupert Harrison, and Hunt's special adviser, Adam Smith.

What was in the emails?

Once Murdoch realised that Cable would not meet him to discuss his case for the BSkyB bid, Michel searched out other options. Cable's own special adviser told them to brief other senior Liberal Democrats, including David Laws. Harrison told Michel that Cable, then business secretary, would make a decision politically without "even reading the legal advice".

According to the emails, Hunt already wanted to meet Murdoch but was told not to do so by his permanent secretary. Instead, he communicated to Michel that he could talk on a mobile instead. Murdoch's response was: "You must be f**king joking. Fine. I will text him and find a time."

Michel then tabled a meeting with Hunt's special adviser on the following Wednesday. Hunt asked for "relevant documents privately". Afterwards, Michel reported to Murdoch that Hunt believed the Ofcom report on News Corp's BSkyB bid was "biased" and questioned its methodology. He said he would "find a way" for them to meet before Christmas.

At this point, Cable loses his responsibility for the bid and it is handed to Hunt, who takes on a quasi-judicial role.

Michel emails Murdoch to say Hunt said "he would get there in the end and he shared our [News Corp's] objectives".

Later Michel wrote: "Managed to get some info tonight. Although absolutely illegal." The email was followed by a wink 'emoticon', which Murdoch insisted showed it meant as a joke. The email was sent a day before the report in question, which was market sensitive.

Was Hunt the only person affected by the Murdoch session?

No. Scottish first minister Alex Salmond also emerges badly from the session. Michel emailed Murdoch to say he would call Hunt "whenever we need him to". It was suggested during the inquiry that Salmond was willing to do so many favours for News Corp after the Scottish National party (SNP) won the support of the Scottish Sun newspaper.

The session also raised questions about the prime minister's previous statements. He had previously said that he did not discuss the BSkyB bid during a Christmas dinner at the house of former News of the World editor Rebekah Brooks. Murdoch said they had in fact had "a tiny side conversation" about the deal.

How does this affect the government?

Today's session was a disaster for the government. Tomorrow figures could show the economy is officially back in recession. Just after their release David Cameron will have to appear at PMQs where he will struggle to answer questions about today's evidence. The phrase omni-shambles, which Mr Cameron had tried to dispel with a major initiative on Monday, will be used all over Westminster once again.

The issue also raises serious questions about Cameron's judgement. The prime minister removed the BSkyB brief from Cable because he had shown himself to be biased. But he then handed it to a man who appears to be even more biased than Cable but in the opposite direction.

That complete malfunction between various government departments – with Hunt and Cable seemingly at war and Osborne's special advisers giving information about the business secretary to a private media firm – will cement the impression that the coalition is uniquely unable to work as a government.

The regular confidential communication between government departments and a major multinational company will also reinforce the notion that the government is in the service of corporate interests, just weeks after the cash-for-access scandal revealed dinners between Mr Cameron and his financial donors.

Finally, the evidence threatens to blow the phone-hacking scandal wide open again with a specific focus on the government. Whereas the first round of the scandal saw responsibility land on Tories, Labour, News Corp and the Met police, a new round of revelations could direct it all at one place.

Will Hunt survive?

Comments from sources close to the media secretary suggest he is not planning on resigning and will give his account of events when he is (inevitably) called to appear at the Leveson inquiry. The prime minister's spokesman said Cameron has "full confidence" in him. It is possible that by focusing on his Leveson appearance he may be able to buy some time and then escape resignation.

To do so he would need to prove Michel had over-egged his influence. Unfortunately for the media secretary, documents on the Leveson inquiry website show a warm relationship between the two, with Hunt suggesting they meet up socially after the phone-hacking row broke.

Analysts are uncertain whether firing Hunt would draw a line under the affair or fan the flames. For the time being, No 10 is expressing full confidence in the man himself but not in the process which took place over the BSkyB deal.