News International set out details on Friday of its compensation scheme for victims of phone hacking, as one of the firm's journalists was arrested for paying police.
The British newspaper arm of Rupert Murdoch's News Corporation media empire said the scheme, first announced in April, was a "speedy, cost effective alternative" to going through the courts.
Police said on Thursday they believed the number of victims had reached almost 5,800 -- an increase of about 2,000 on the last estimate given in July, when the News of the World was shut down over the scandal.
Meanwhile, detectives investigating allegations of payments to police officers by News International staff arrested on Friday a 48-year-old journalist, the sixth person to be detained in the probe.
Media reports named him as Jamie Pyatt, who works for The Sun. He had covered the murder of teenager Milly Dowler, whose voicemail was hacked by the News of the World when she went missing.
News International has refused to say how much it is prepared to pay out in compensation for phone hacking by a private detective working for the News of the World, although a spokeswoman told AFP there was "no maximum".
Media reports suggested the company had set aside £20 million, but it expected most payments to be about £100,000.
Former High Court judge Charles Gray will act as the independent ajudicator for the scheme, which intends to process each claim within six months and is offering 10 percent more than what victims could expect to receive in court.
"I am confident the scheme, which is now operational, will provide a fair, effective and speedy means for determining compensation in these cases," Gray said in a statement.
"It should provide very significant benefits to applicants such as avoiding the enormous expense of court proceedings."
However, one lawyer warned that joining the scheme would likely require potential victims to waive their ability to launch a further legal battle.
"Effectively, there is no possibility of an appeal, save where there has been 'serious irregularity'," said Steven Heffer, head of defamation and reputation management at solicitors Collyer Bristow.
News International has already settled a string of compensation claims, including by actress Sienna Miller, who agreed to take £100,000 in damages and legal costs in June after bringing a case at London's High Court.
Last month, the company also confirmed it would pay £2 million to the family of Dowler, who disappeared in 2002. Revelations that the 13-year-old's phone was hacked sparked the crisis that shut the News of the World.