Ms Rebekah Brooks, the controversial Chief Executive of News International, has resigned.
In an e-mail to staff, Ms Brooks, who has worked with News Corp for 22 years, said it was necessary to maintain the reputation of the company.
It's the latest reversal by Mr Rupert Murdoch, who had until early this week given her his wholehearted support and insisted she was his “top priority.”
This was despite calls, including from the Prime Minister, Mr David Cameron, that it would be better if he accepted her resignation.
“As chief executive of the company, I feel a deep sense of responsibility for the people we have hurt and I want to reiterate how sorry I am for what we now know to have taken place,” wrote Ms Brooks in an email to employees.
She added that she would be concentrating on “correcting the distortions and rebutting the allegations” made against her.
Mr James Murdoch praised Ms Brooks in a statement and pledged his full support for her as she tried to clear her name.
She will be replaced, with immediate effect, by Mr Tom Mockridge, the current Head of Sky Italia, and Chief Executive of News Corp's European television business.
Ms Brooks is due to appear before a House of Commons committee inquiry, alongside Mr Rupert and Mr James Murdoch, on Tuesday.
Both had originally declined the invite to the meeting of the Culture, Media and Sport Committee, which is one of the numerous bodies looking into the allegations at the moment.
They were issued with formal summons on Thursday.
Meanwhile, pressure ramped up across the Atlantic, with the FBI confirming that it was looking into allegations that victims of the 9-11 terrorist attacks on the country had been victims of phone hacking too.
In a rare interview with the Wall Street Journal , the elder Murdoch defended his media group, arguing that despite “minor mistakes” they had dealt with the crisis well.