Rupert Murdoch's News Corporation today withdrew its bid for satellite broadcaster BSkyB in the wake of the phone-hacking scandal.
News Corp, which also owns the Sun and the Times newspapers as well as its 39% shareholding in BSkyB, said it will continue to be a long-term shareholder in the company.
Chase Carey, deputy chairman, president and chief operating officer of News Corp, said: "We believed that the proposed acquisition of BSkyB by News Corporation would benefit both companies but it has become clear that it is too difficult to progress in this climate."
Shadow culture secretary Ivan Lewis said the "remarkable" development was "a victory for the public of this country, a victory for Parliament and a victory for the tremendous leadership that Ed Miliband has shown ever since this scandal emerged".
Mr Lewis said it was important that the criminal investigation and judge-led inquiry continue regardless of the bid being withdrawn.
He told the BBC: "What we mustn't allow this announcement today to do is to end the need to get to the bottom of this unethical and criminal behaviour that has so damaged our newspaper industry and has also threatened to undermine our democracy."
Meanwhile, the senior lawyer who vetted News of the World stories for more than
Tom Crone has stepped down as legal manager of News International, which also publishes the Sun and the Times, after 26 years at the company, a source said.
His main responsibility was to advise the News of World and the Sun on legal matters relating to editorial before and after publication.
News International declined to confirm whether he resigned or was asked to leave.
A source in the legal world close to Mr Crone described him as "an incredibly professional and very clever Fleet Street lawyer".
The source said: "Tom was very much a hands-on man when it came to the News of the World. He was always there on a Saturday.
"He would usually be the only lawyer on a Saturday handling pre-publication reading.
"Tom is very quiet. He doesn't suffer fools gladly. He can be very abrupt and dismissive of people when he thinks they are being stupid.
"He has always managed the News of the World and the Sun very closely.
"He would very regularly pick up the phone to someone and say 'Let's just settle this and get shot of it rather than incur huge legal costs'.
"That was his great art, having a very close sense of when it was sensible to fight something and when it was sensible not to fight something. On many occasions he got it absolutely right."
Mr Crone, a family man who is a keen golfer, practised as a barrister for five years and worked as an in-house lawyer for the Mirror Group before joining News International in 1985.
News International shut the News of the World on Sunday after 168 years in an attempt to stem the widening scandal over the paper's involvement in hacking the voicemail messages of celebrities, politicians, and victims of crime and terrorism.
