Rupert Murdoch's empire must be dismantled – Ed Miliband

Ed Miliband has called for cross-party agreement on new media rules to curtail Rupert Murdoch's power. Photograph: Getty Images

Ed Miliband has demanded the breakup of Rupert Murdoch's UK media empire in a dramatic intervention in the row over phone hacking.

In an exclusive interview with the Observer, the Labour leader calls for cross-party agreement on new media ownership laws that would cut Murdoch's current market share, arguing that he has "too much power over British public life".

Miliband says that the abandonment by News International of its bid for BSkyB, the resignation of its chief executive, Rebekah Brooks, and the closure of the News of the World are insufficient to restore trust and reassure the public.

The Labour leader argues that current media ownership rules are outdated, describing them as "analogue rules for a digital age" that do not take into account the advent of mass digital and satellite broadcasting.

"I think that we've got to look at the situation whereby one person can own more than 20% of the newspaper market, the Sky platform and Sky News," Miliband said. "I think it's unhealthy because that amount of power in one person's hands has clearly led to abuses of power within his organisation. If you want to minimise the abuses of power then that kind of concentration of power is frankly quite dangerous."

The move takes Miliband's campaign against the abuse of media power to new heights after a fortnight in which he has reinvigorated his own leadership by leading the attack on the Murdoch empire. While he insisted that the recently announced inquiries should take their course, the Labour leader said he hoped the main parties could agree on a common approach.

His latest intervention, as a poll on Saturday night showed his personal rating up seven points on a month ago, comes ahead of what promises to be a dramatic appearance by Rupert Murdoch, his son James, the chief executive of News Corporation Europe and Asia, and Brooks before the Commons culture, media and sport committee.

Committee members preparing to grill the trio are to be given legal advice on the morning of the hearing on how far they can push the News Corp boss and his son for answers. The committee's chairman, the Tory MP John Whittingdale, has asked for details of their lines of questioning to avoid duplication.

News Corp is understood to be concerned that the committee will set a trap by asking questions the Murdochs are unable to answer due to the continuing criminal investigations and are taking advice on how to avoid yet another public relations disaster as the company attempts to rebuild its reputation.

Further pressure was piled on Murdoch after the Liberal Democrats wrote to the media regulator, Ofcom, urging it to launch an investigation that could see his holding company, News Corp, forced to sell its stake in satellite broadcaster BSkyB.

The Broadcasting Act places a duty on the regulator to consider "any relevant conduct of those who manage and control such a licence".

Although News Corp, whose News International subsidiary owned the News of the World, has only a minority 39% share in BSkyB, the Lib Dems argue the company is "strongly placed materially to influence the policy and strategic direction of BSkyB", suggesting the regulator is duty bound to investigate.

Simon Hughes, the Lib Dem party's deputy leader, Don Foster, its media spokesman, and Tim Farron, its president, are demanding that the watchdog's members "take measures now to satisfy yourself that the owners of the BSkyB licence continue to be 'fit and proper'", given "the manifest public concern about News International's activities, the close integration of News International with its parent company News Corporation, [and] News Corp's effective control of BSkyB".

The three dismissed claims that the regulator could not act while criminal investigations were current, saying there were "no legal reasons to stop Ofcom from conducting its work alongside that done by the police".

A spokeswoman for Ofcom said: "We received this letter early on Friday evening. We will be considering our response next week."

She added that the regulator was continuing to gather information, which it hoped would assist in the discharge of its duties. "We have already written to a number of relevant authorities and can confirm that follow-up meetings will now be taking place."

In his interview Miliband said that once a Sunday Sun was launched, possibly in August, this would add further to the Murdoch empire's penetration of the UK media market.

Meanwhile, the foreign secretary, William Hague, defended David Cameron's regular meetings with News International executives and his decision to invite Andy Coulson, his former director of communications who was arrested 10 days ago, to Chequers several weeks after Coulson's resignation over the phone-hacking scandal.

"In inviting Andy Coulson back, the prime minister has invited someone back to thank him for his work – he's worked for him for several years – that is a normal, human thing to do," Hague told BBC Radio 4's Today programme. "I think it shows a positive side to his character."

He added: "Personally I'm not embarrassed by it in any way – but there is something wrong here in this country and it must be put right. It's been acknowledged by the prime minister and I think that's the right attitude to take."

Hague continued: "It's not surprising that in a democratic country there is some contact between leaders of the country, and indeed opposition leaders, and indeed I believe on that list of meetings there are also meetings with the executives of the Guardian and Trinity Mirror and whatever other news organisations."

Cameron has acknowledged that he met Coulson since his resignation, but "not recently and not frequently".

"When you work with someone for four years as I did, and you work closely, you do build a friendship and I became friends with him," the prime minister said.

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Rupert Murdoch's bloody Friday as Rebekah Brooks and Les Hinton quit

Rupert Murdoch is escorted out of a hotel where he met the familly of murdered teenager Milly Dowler Photograph: Paul Hackett/Reuters

Les Hinton, the chief executive of Dow Jones and Rupert Murdoch's right-hand man, resigned from News Corp on Friday night, a statement from the company said.

Hinton, who led Murdoch's News International when the phone-hacking allegations first arose, quit hours after Rebekah Brooks, News International's chief executive, also resigned.

Their departures came on the day the phone-hacking scandal engulfing Murdoch's empire led him to issue a widespread, abject apology for what he described as "serious wrongdoing".

Less than 24 hours after insisting the company had made only "minor mistakes" in handling the crisis, a contrite Murdoch arranged a private meeting with the family of Milly Dowler and issued a full-page apology in every national newspaper for his company's behaviour.

The dramatic turn of events came 10 days after the Guardian revealed that private investigators working for the News of the World had hacked into the phone of the murdered girl during a police investigation into her disappearance.

The subsequent outrage and evidence of further wrongdoing led to the closure of the 168-year-old Sunday tabloid, the scrapping of the News Corp bid for BSkyB and the arrest of former NoW employees.

In his resignation statement Hinton said he had watched "with sorrow from New York as the News of the World saga has unfolded". He added "In September 2009, I told the [parliamentary] committee there had never been any evidence delivered to me that suggested the conduct had spread beyond one journalist.

"If others had evidence that wrongdoing went further, I was not told about it."

In a separate development, No 10 admitted that David Cameron hosted Andy Coulson at Chequers in March, two months after his resignation as the Downing Street director of communications. Labour accused the prime minister of an "extraordinary lack of judgment" in extending an invitation to Coulson, who was arrested last week. The former NoW editor denies any knowledge of phone hacking.

The fallout from the scandal is placing intense pressure on Sir Paul Stephenson, the Met police commissioner. Cameron is said to be furious that Stephenson did not tell him he had hired Neil Wallis, the former NoW deputy editor arrested this week, to advise him on media relations. Stephenson has been asked to explain himself to Theresa May, the home secretary.

It was unclear what had prompted the Murdochs to accept the resignation of Brooks, after steadfastly standing by her in the face of calls for her to go from the leaders of all the main political parties, including the prime minister.

It is understood, however, that the decision was not made overnight. Her departure was planned with military precision during a series of family summits and transatlantic phone calls with shareholders over the last few days. The resignation comes just four days before she is due to appear before parliament alongside Rupert and James Murdoch, chairman of News International, to answer questions about the scandal.

In her resignation statement, Brooks said : "The reputation of the company we love so much, as well as the press freedoms we value so highly, are all at risk."

Hours after that statement, Rupert Murdoch met the parents and sister of Dowler in London. "He was very humbled and very shaken and very sincere," said Mark Lewis, the Dowler family lawyer. "I think this was something that had hit him on a very personal level and was something that shouldn't have happened. He apologised many times. I don't think somebody could have held their head in their hands so many times and say that they were sorry."

Lewis said Milly's parents, Sally and Bob, and her sister, Gemma, had told Murdoch his newspapers "should lead the way to set the standard of honesty and decency in the field and not what had gone on before".

Murdoch had replied that the News of the World's actions were "not the standard set by his father, a respected journalist, not the standard set by his mother", Lewis said.

In a full-page apology in the Guardian and other newspapers today, the News Corp boss says: "We are sorry for the serious wrongdoing that occurred. We are deeply sorry for the hurt suffered by the individuals affected. We regret not acting faster to sort things out."

Such an admission represents a volte face after Murdoch praised the company's handling of the scandal in his first interview on the issue, given to one of his own newspapers, the Wall Street Journal.

The printed apology also suggests that the company will do more to atone for the mistakes of the past. "I realise that simply apologising is not enough," he writes. "In the coming days, as we take further concrete steps to resolve these issues and make amends for the damage they have caused, you will hear more from us."

In his own statement to staff at News International, which still owns the Times, the Sunday Times and the Sun, James Murdoch admitted that the company had made mistakes but praised "one of the outstanding editors of her generation".

Brooks is to be replaced by the head of Sky Italia, Tom Mockridge.

Downing Street welcomed her resignationbut the prime minister's spokesman said Brooks should still give evidence to the media select committee next week.

The prime minister's spokesmanHe said of the resignation: "He thinks it's the right decision. He said the other day he would have accepted her resignation."

No 10 hopes that releasing details of the prime minister's contacts with the media and setting out the full scope of the judge-led inquiry will help as he attempts to regain the initiative.

The prime minister hopes to finalise the membership of the inquiry and agree its terms of reference by the end of next week. But Labour believes that he will continue to face pressure until Coulson's position is clarified.

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