Osborne dragged further into phone-hacking row

George Osborne was pulled further into the centre of the storm surrounding the government's links with the Murdoch empire today after new reports emerged of his role in hiring Andy Coulson.

The chancellor was reported to have hosted Andy Coulson, Rebekah Brooks and their partners in his grace-and-favour Dorneywood residence for a 'pyjama party' in 2010, as the decision over News Corp's BSkyB bid was being considered.

The revelation prompted further calls for Mr Osborne to be forced to appear at the Leveson inquiry and prompted shadow media secretary Harriet Harman to question his "judgement".

Separate revelations in a new David Cameron biography, 'Practically a Conservative', suggest he and the prime minister backed down on a key demand when they hired Mr Coulson as director of communications.

Mr Cameron wanted Mr Coulson to guarantee he would not write a memoir, but Mr Osborne felt they would lose the battle of wills and backed down.

Mr Coulson refusal to sign a confidentiality cause despite deep concerns from Mr Cameron has been interpreted by critics as further evidence of the Cameron-Osborne team's desperation to get the Murdoch clan on-side.

Mr Coulson's appointment will come under renewed examination tomorrow when former Cabinet secretary Lord O'Donnell gives evidence.

Of the eight ministers given 'core participant' status at Leveson Mr Osborne is the only one not set to give evidence.