Managers at the Times knew one of their reporters had tried to hack into an anonymous blogger's email before they fought a High Court battle to unmask him as a serving policeman, the Leveson Inquiry heard today.
Lawyer and blogger David Allen Green told the hearing that the newspaper should have disclosed this information to Justice Eady, the judge in the case.
He said: "If you have used an email hack as part of an investigation, you cannot artificially pretend you never did that. You will use that information as part of solving the puzzle which you have set yourself...
"My concern is this should have been put before the court at the injunction application."
The Times named Lancashire detective Richard Horton as the author of the award-winning NightJack blog in June 2009 after Justice Eady refused to grant him anonymity.
James Harding, the paper's editor, told the inquiry earlier this month that one of his reporters - separately named in The Times as Patrick Foster - was issued with a formal written warning for professional misconduct for gaining unauthorised access to an email account.
In a further letter to the inquiry released today, Harding said: "When the reporter informed his managers that, in the course of his investigation, he had on his own initiative sought unauthorised access to an email account, he was told that if he wanted to pursue the story he had to use legitimate means to do so.
"He did, identifying the person at the heart of the story using his own sources and information publicly available on the internet.
"On that basis we made the case in the High Court that the newspaper should be allowed to publish in the public interest. After the judge ruled that we could publish in the public interest, we did.
"We also addressed the concern that had emerged about the reporter's conduct, namely that he had used a highly intrusive method to seek information without prior approval. He was formally disciplined."
Harding stressed this was an "isolated incident" and he had no knowledge of anything else like it.
But Allen Green, who writes the Jack of Kent blog, told the inquiry today: "That information in that letter should have been given to the court before Justice Eady."
Undercover journalist Mazher Mahmood - known for disguising himself as a "fake sheikh" while working for the News of the World - admitted today that he once "foolishly" changed electronic records to cover up a mistake.
Mahmood resigned from the Sunday Times in 1989 after executives discovered he had tampered with a file in the newspaper's computer room, the inquiry into press standards heard.
He told the hearing: "I acknowledge it was wrong. I was young, I was naive, it was a foolish thing to do, I acknowledge that."
But Mahmood dismissed as "completely untrue" a claim by former Sunday Times news editor Michael Williams in a recent British Journalism Review article that he "offered a financial bribe" to computer room staff to alter the records.
The journalist lost his job at the News of the World when the paper closed last July over the phone-hacking scandal, and is now working for the Sunday Times again.
Bob Crow, general secretary of the RMT union since February 2002, told the inquiry that newspaper journalists invaded his privacy on holiday in the Caribbean last January and used illegal "blagging" to discover the owner of a scooter used to give him a lift in 2003.
He has been told that the News of the World's publisher, News International, commissioned private investigator Derek Webb to follow him in October, November and December 2010 and in January last year.
Crow said: "Our trade union, over the last 10 to 12 years, has been the victim of a campaign of victimisation and harassment against not only me but officials of my union and staff of my union, for doing one thing and one thing only - that is standing up for good honest working men and working women."