Scotland Yard on Friday arrested Andy Coulson, former Downing Street press secretary and former editor of Rupert Murdoch's News of the World tabloid.
The BBC reported that “a number of suited men” understood to be police, entered Coulson's South London home “with large plastic crates” at about midday local time.
Police later confirmed that the paper's former royal editor Clive Goodman, the reporter jailed in January 2007, had been re-arrested and was being questioned in connection with alleged payments to police.
Coulson has denied any knowledge of phone hacking while he was in charge of News of the World, which is accused of targeting crime victims, celebrities and politicians. Police have identified 4,000 possible targets.
His arrest followed an announcement by Murdoch on Thursday that News of the World would be closed, and this Sunday's edition would be the paper's last.
It also came as British Prime Minister David Cameron announced two formal inquiries into the scandal, one to be led by a judge.
London's The Independent newspaper said that detectives were on Friday searching both Coulson's home in Forest Hill, south London, and Goodman's home in Surrey.
Meawhile, the BBC said Coulson resigned from Downing Street because of things that happened while he was in charge of the tabloid, and that Cameron took "full responsibility" for hiring Coulson.
I became friends with him and I think he did his job for me in a very effective way. He became a friend and he is a friend.
When asked if his decision to hire Coulson was a “screw up”, Cameron said the “people will decide”.