George Osborne has been accused of a "terrible error of judgement" by advising David Cameron to bring Andy Coulson into government as his chief spin doctor, after the former newspaper editor was found guilty today at the phone hacking trial.
Osborne snapped up Coulson to head up the Tory media operation within months of resigning as News of the World editor in January 2007.
Shadow chancellor Ed Balls' attempt to ask Osborne about the verdict during a session of Treasury questions was initially cut off by House of Commons speaker John Bercow, insisting that: "I really can't see the relevance to the chancellor of the exchequer."
However, Balls managed to ask the Chancellor: "Does the chancellor now accept that he has brought the office of Chancellor of the Exchequer and the Treasury into disrepute by urging the Prime Minister for his own reasons to bring Mr Coulson into government, and hasn't he damaged his own reputation and that of the government?"
Osborne dodged Balls' question but said that he and the Prime Minister would comment on the final verdict "if appropriate", adding that Balls was in "no position to give lectures" due to having worked alongside controversial former Labour spin doctor Damian McBride.
Andy Coulson's fate in the phone hacking trial has been a source of potential embarrassment for the government, as David Cameron admitted in 2011 that he regretted hiring Coulson and promised "profound apologies" if the former News of the World editor was found guilty.
"The decision to hire him was mine and mine alone and I take full responsibility for it," he told MPs.
A spokesman for the Prime Minister said Cameron "entirely" stood by his words to parliament in July 2011, when he told MPs: "I have said very clearly that if it turns out Andy Coulson knew about the hacking at the News of the World he will not only have lied to me but he will have lied to the police, to a select committee, to the Press Complaints Commission and, of course, perjured himself in a court of law.
"More to the point, if that comes to pass, he could also expect to face severe criminal charges. I have an old fashioned view about 'innocent until proven guilty'. But if it turns out I have been lied to, that would be a moment for a profound apology. And, in that event, I can tell you I will not fall short."
Coulson was found guilty today of plotting to hack phones while editor of the newspaper, with the spin doctor now potentially facing jail following the high-profile trial at the Old Bailey.
The jury, which has been considering verdicts since Wednesday, June 11, is still considering further charges against Coulson of conspiring to commit misconduct in a public office by paying police officers for two royal directories.
During his trial, Coulson admitted that he never told the Tories he knew of the hacking of Labour home secretary David Blunkett's voicemail in 2004 because, if he had come clean, he probably would not have got the job.
The 46-year-old maintained that he thought chief reporter Neville Thurlbeck was responsible. In his earlier evidence to the Leveson Inquiry in 2012, Coulson said Cameron asked him about the Goodman case. He told the inquiry: "I said to him what I said publicly - I knew nothing in terms of what they did."
Cameron did not ask for any more assurances over Coulson's links to phone hacking, despite allegations about legal pay-offs for victims being published in the Guardian in July 2009, the inquiry heard.
Instead, the Prime Minister stood by his spokesman long after the first rumblings in the media that all the hacking at the NotW had not been exposed.
On resigning as Cameron's spin doctor in January 2011, Coulson said: "Unfortunately, continued coverage of events connected to my old job at the News of the World has made it difficult for me to give the 110% needed in this role."
The Prime Minister responded by saying he was "very sorry" that Coulson was "compelled" to resign because of the continuing pressure over phone hacking.