Labour has called for culture secretary Jeremy Hunt to resign following claims that he backed News Corporation's bid to take over BSkyB and leaked inside information to the media giant.
The demand followed the release of a 163-page dossier detailing contacts between the culture secretary's office and senior News Corp executive, Frederic Michel.
In a series of emails to James Murdoch and other executives, Michel - then the company's director of public affairs in Europe - reported on Hunt's thoughts about the progress of the controversial takeover plans, which were dropped in July last year amid the furore over phone-hacking at the News Corp-owned News of the World.
Another email, dating from January last year, reported Hunt's belief that it would be "game over" for opponents of the BSkyB takeover once plans to spin off Sky News into a separately listed company were publicly announced.
"He said we would get there at the end, and he shared our objectives," Michel noted.
Although many of the emails refer directly to Michel having spoken to "JH", he told the inquiry that in fact this was shorthand for contacts with the culture secretary's office - usually his special adviser, Adam Smith.
Labour leader Ed Miliband said Hunt had been shown to be "acting in the interests of the Murdochs, not the British people" and should resign.
"He himself said that his duty was to be transparent, impartial and fair in the BSkyB takeover. But now we know that he was providing advice, guidance and privileged access to News Corporation. He was acting as a backchannel for the Murdochs," he said.
"He cannot stay in his post. And if he refuses to resign, the prime minister must show some leadership and fire him."
Raising a point of order in the Commons, deputy Labour leader and shadow culture secretary Harriet Harman said Mr Hunt's conduct had fallen "woefully short" of the standard expected.
She called on him to apologise to the Commons and resign from David Cameron's Cabinet.
"In view of the evidence that has been adduced before the Leveson Inquiry today it appears that the secretary of state has fallen woefully short of the standards expected by his office and by the public interest," Harman told MPs.
"I believe, on a point of order, that the right thing for the secretary of state to do would be to come to this House to offer an apology and to tender his resignation."
But Downing Street insisted that the culture secretary still had the prime minister's full confidence.
And an aide to Hunt said that he "feels completely confident that he followed the proper process" and did not intend to voluntarily make a statement to MPs.
Instead he would respond to all of the points raised at today's hearing when he gives evidence himself to the Leveson Inquiry "in a few weeks' time".
"He is going to give evidence where he will respond to everything that was raised today in a few weeks' time," the aide said.
"He thinks it is appropriate that he goes through the proper channels - that is giving evidence to Leveson."
Asked if that meant he would reject Labour's demands that he appear in the Commons, she said: "If he is called then of course he will."