British PM's top aide was on News Corp. payroll while working for government

Former News of the World editor Andy Coulson, at the centre of phone hacking claims, was still being paid by the tabloid's owners while employed as the Conservative Party's media chief, the BBC said.

Coulson received several hundred thousand pounds in severance pay after he began work in July 2007 as the director of communications for Prime Minister David Cameron's party, who were then in opposition, the report said.

The 43-year-old was arrested in July in the probes into phone hacking and corruption at the Rupert Murdoch-owned Sunday tabloid and was released on bail until October. Coulson has always denied wrongdoing.

Coulson edited the News of the World from 2003 to January 2007, when he resigned after the tabloid's royal correspondent was jailed, along with a private investigator, for voicemail hacking.

The BBC said he was given the full pay-off entitlement under his two-year contract in installments until the end of 2007.

He continued to receive work benefits from News International -- Murdoch's British newspaper publishing arm -- including healthcare cover for three years, and a company car.

Cameron took Coulson into Downing Street as the government's media chief when he became prime minister in May 2010.

He was on the public payroll before he resigned in January, saying the phone hacking scandal meant he could no longer do his job properly.

The tabloid was closed in July after it emerged it had hacked into the voicemail of a missing teenage girl who was later found dead.

A spokesman for the opposition Labour Party said: "David Cameron now faces allegations that one of his top advisers was also in the pay of News International.

"There are serious questions to answer about Mr Coulson's employment in Downing Street and the country should not have to wait for full transparency."

A Conservative Party spokeswoman said: "Senior party officials have no knowledge of Andy Coulson's severance arrangements."

A News International spokesman said: "News International consistently does not comment on the financial arrangements of any individual."

Cameron has said that with hindsight, he would not have hired Coulson.

British lawmakers last week released a letter from the News of the World's disgraced former royal correspondent Clive Goodman claiming phone hacking was "widely discussed" at the tabloid.

Senior executives have always maintained that the practice was restricted to a rogue reporter and a private investigator.