Conservative communications chief Andy Coulson has told MPs he did not "condone or use" phone hacking when he was editor of the News of the World.
Mr Coulson quit as the editor after a reporter was jailed for hacking.
Although he said he had not known about it, he told the culture committee he regretted things going "badly wrong" and had taken responsibility by going.
He also said he was told by police on the "Friday before last" of "strong evidence my phone was hacked".
He added there was "more evidence that my phone was hacked than John Prescott's phone was hacked" - a reference to claims by the former deputy prime minister that he had been targeted by reporters.
The hearing was the first time Mr Coulson, who was News of the World editor from 2003 to 2007, has been questioned about people's mobile phone voicemail being hacked into.
He said he had given his reporters the freedom to do their job but "my instructions to the staff were clear - we did not use subterfuge of any kind unless there was a clear public interest in doing so. They were to work within the PCC code at all times".
Mr Coulson said his staff attended Press Complaints Commission seminars and were given regular refreshers with company lawyers.
He went on: "I gave the reporters freedom as professional journalists to make their own judgments and I also gave them plenty of resources.
"We spent money in pursuit of stories at the News of the World, more money than most newspapers, and I make no secret of the fact."
He added: "Things went badly wrong under my editorship of the News of the World.
"I deeply regret it. I suspect I always will. I take the blame because ultimately it was my responsibility. I am not looking for sympathy and I am unlikely to get any today.
"But when I resigned I gave up a 20 year career with News International and in the process everything I worked towards from the age of 18. But I think it's right that when people make mistakes, they take responsibility and that is why I resigned."
He said he had not "micro-managed" every story but he accepted financial controls at the newspaper could have been tighter during his time as editor.
He said he reacted to the news of Royal reporter Clive Goodman's arrest with "surprise and anger"
But he added: "If a rogue reporter decides to behave in that fashion, I am not sure there is an awful lot more I could have done."
He said stories about phone hacking had been "in the ether" during his 20 year career as a journalist but he had never been involved in such activities.
He also said he had not commissioned and had no knowledge of any story about Gordon Taylor, head of the Professional Footballers' Association, who received a £700,000 out-of-court payment from News International over phone tapping allegations.
He said he had first learned about the Taylor litigation "when I read about in The Guardian".
'Judge and jury'
Quizzed about his role as Tory leader David Cameron's communications chief, he told the committee: "I have done my best to work in as upright and as proper a fashion as I possibly can" but said ultimately it was "for others to judge".
Asked about his relations with Buckingham Palace, he said: "There is no problem my end."
Speaking after the hearing, a Tory spokeswoman said: "There is no doubt about David Cameron's confidence in Andy Coulson. Andy Coulson's job is safe."
But Lib Dem home affairs spokesman Chris Huhne said: "Andy Coulson's defence is that he did not know what was going on despite the mounting evidence that his newsroom was widely using illegal phone hacking.
"Either he was complicit in crime, or he was one of the most incompetent Fleet Street editors of modern times. Neither should be a top recommendation to David Cameron."
News of the World managing editor Stuart Kuttner, who was giving evidence alongside Mr Coulson, objected to the presence of Conservative MP Philip Davies on the committee.
He said the MP had no right to question to him as he had made comments about his retirement from News International in a newspaper story.
"I am concerned that Mr Davies is acting as judge and jury and has already made up his mind as to the reliability of anything I say," he told the committee.
But his concerns were dismissed by the committee chairman, who pointed out that it was not a court of law and MPs were entitled to express their opinions.
Mr Whittingdale began the three hour hearing by saying he had stood aside as a member of the Conservative Party board, which now employs Coulson, during the committee's investigation.
But the newspaper's lawyer Tom Crone said Labour MP and committee member Tom Watson should not be allowed to question News International executives.
He threatened to complain to the Parliamentary authorities if Mr Watson, who is involved in legal action with the News of the World's sister paper The Sun, accused the firm of "attempting to interfere with the work of the committee".
But Mr Whittingdale said he had received advice from the Speaker's counsel was that it did not interfere with the ex-Labour minister's ability to take part in the inquiry.
Before Mr Coulson began giving evidence Mr Crone and current News of the World editor Colin Myler confirmed News International had made a payment to Gordon Taylor and two other people, which was the basis of The Guardian's phone hacking allegations.
The Guardian has also claimed up to 3,000 public figures had their phones hacked in an attempt to obtain stories.
Mr Myler reacted angrily to his staff being accused of what he called "systematic illegality", asking the committee: "Where is the evidence?"
He said rigorous new safeguards had been put in place, following the Goodman case, to make sure that such practices did not happen again.
"We've also put in place a series of measures to guard against the situation arising again in the News of the World," he told MPs.
"These include the introduction of strict protocols on cash payments, and on the level of justification, authorisation and auditing of cash payments.
"Since I took over as editor, cash payments for stories and tip-offs have been reduced by between 82% and 89%."
Clive Goodman was jailed two years ago after pleading guilty to hacking into the phone messages of royal staff. Private investigator Glenn Mulcaire was also jailed.