Current and former editors of Rupert Murdoch's British tabloid The Sun defended the newspaper at the country's phone-hacking inquiry on Monday, saying it could be a "powerful force for good".

Staff at Britain's best-selling newspaper told the Leveson inquiry in London that they had seen no evidence that the The Sun was guilty of the hacking that led to the closure of sister paper the News of the World.

Kelvin MacKenzie -- who as editor from 1981 to 1994 presided over colourful headlines such as "Gotcha", about the sinking of the Argentine warship General Belgrano during the Falklands War -- said the paper had become more cautious.

"Towards the end of my time as editor I was less bullish than I was, perhaps, during the '80s," MacKenzie said.

"The editors (now) are more cautious and were probably right to be cautious."

He admitted some previous mistakes. In 1992, he had told then-prime minister John Major he was going to "throw a bucket full of s(expletive)" over him in the following day's paper after Britain left the European Exchange Rate Mechanism.

And MacKenzie said Murdoch was furious when The Sun had to pay £1 million in the late 1980s in libel damages to singer Elton John, saying that he had received 40 minutes of "non-stop abuse" by telephone from the Australian-born tycoon.

MacKenzie -- whose other most famous headline was "Freddie Starr Ate My Hamster", about a British comedian who put a rodent between two slices of bread and pretended to eat it -- now writes a column for The Sun.

Dominic Mohan, who has edited The Sun since 2009, said the paper could be a "powerful force for good" through its campaigns, support for charities and efforts to explain complex concepts in clear language.

The former showbiz reporter brushed off a comment he made in 2002 about phone-hacking at a rival tabloid, the Daily Mirror.

He said it was a "cheap shot" and a "joke" at the expense of then editor Piers Morgan, who now fronts a talk show on US-based news network CNN and denied phone-hacking when he appeared at the inquiry last month.

Mohan also appealed for a legal "level playing field" between Britain's press and the Internet, saying that over regulation could be a "potentially mortal blow" to an already struggling newspaper industry.

The paper's current royal editor Duncan Larcombe meanwhile told the inquiry, led by senior judge Brian Leveson, that he contacted Buckingham Palace before running any exclusive story on the royal family.

The Sun's showbiz editor Gordon Smart also told the panel that he had no knowledge of phone-hacking being used by the paper, or at the News of the World, where he worked for three months in the previous decade.

Prime Minister David Cameron ordered the inquiry amid a spiralling scandal over the illegal hacking of mobile phone voicemails by the News of the World, Murdoch's British Sunday tabloid, which was shut down in July.

The scandal has also threatened to engulf the The Sun, which has itself faced legal action for alleged phone hacking. It denies the allegations.

A string of people has been arrested over the phone-hacking scandal, including former Sun editor and News International boss Rebekah Brooks, and ex-News of the World editor Andy Coulson, who went on to become Cameron's spokesman.

Brooks' former personal assistant was reportedly arrested last week on suspicion of deleting emails belonging to News International, the British newspaper arm of Murdoch's empire.