News International's longstanding legal manager Tom Crone has left the company, with the news emerging as parent company News Corporation withdrew its takeover bid for BSkyB and Prime Minister David Cameron confirmed details of the public inquiry to be held on the phone-hacking scandal.

Crone spent more than 20 years with News International, providing legal advice on editorial matters at both The Sun and the News of the World (NoW), which published its final issue last weekend (10 July) after being closed in the wake of the hacking row engulfing the 168-year old paper.

News of Crone's departure from the news group came on the same day that News Corp announced it was withdrawing its bid for full control of BSkyB in the wake of mounting public criticism in light of revelations that NoW journalists hacked into the phones of murdered schoolgirl Milly Dowler, the families of dead servicemen as well as numerous celebrities and political figures.

News Corp's withdrawal came as the House of Commons was preparing to vote on a motion asking the company to drop the bid, with the leaders of all three political parties expected to have backed the motion, which would not have been legally binding.

It also came as Cameron confirmed that Lord Justice Leveson will lead the public inquiry that will look into all aspects of the alleged wrongdoing at NoW and within the police, as well as making recommendations for a better method of regulating the press. Leveson, who was called to the Bar in 1970 and took Silk in 1986, was appointed as a High Court judge in 2000. In October 2006 he was named as a Lord Justice of Appeal.

Delivering a statement to the Commons, Cameron said: "We have decided that the best way to proceed will be with one inquiry but in two parts. It will be under one of the most senior judges, Lord Justice Leveson. It will be carried out under the 2005 Inquiries Act and will have the power to summon journalists, politicians, and proprietors."

He added: "He will return with recommendations for the regulation of the press, of ways to ensure a free press which is nonetheless held to the highest ethical standards. It will also look at the relationship between the press and the police. Lord Leveson has agreed to the terms of this inquiry."

Leveson said of his appointment: "The terms of reference raise complex and wide-ranging legal and ethical issues of enormous public concern. The inquiry must balance the desire for a robustly free press with the rights of the individual while, at the same time, ensuring that critical relationships between the press, Parliament, the Government and the police are maintained. The press provides an essential check on all aspects of public life. That is why any failure within the media affects all of us. At the heart of this inquiry, therefore, may be one simple question: who guards the guardians?

He added: "Once the panel of experts has been appointed, we will consider how the inquiry will proceed and will then call for evidence. I intend to provide more information on these matters before the end of the month."

Rafts of law firms have been drawn into the matter, with firms including Olswang and Carter-Ruck among those advising either News International or victims.

• For more details on the ongoing saga at News International click here