Former News of the World editor Andy Coulson has told the phone hacking trial he was "shocked" when he learned a reporter had listened to voicemails of then-Home Secretary David Blunkett.
Coulson told the Old Bailey he initially stopped the story in 2004 but later changed his mind and confronted Mr Blunkett about his alleged affair with Kimberly Fortier, the publisher of The Spectator magazine.
He was first alerted to the story by then-chief reporter Neville Thurlbeck, who phoned him on holiday in Italy.
Thurlbeck told him he was sure the story was right because he had heard a voicemail, Coulson said.
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During his third day in the witness box, Coulson said: "Neville told me he had a tip that David Blunkett was having an affair with Kimberly Fortier. He said that he believed the story was true because he heard some voicemails.
"I was shocked because he told me he had heard some voicemail messages. I was shocked that he was telling me this as well because it was in relation to David Blunkett, the home secretary.
"I was quite angry about it. I used reasonably colourful language, words to the effect 'What in earth do you think you're doing'."
Coulson told the court he told the reporter to stop the investigation.
He added: "My concern was it was an apparent breach of privacy and I was concerned also that this was involving somebody who I knew. He was somebody we were broadly supportive of."
When he returned to work, Coulson said he had a meeting with Thurlbeck, who put a case for the story by playing him some voicemails.
Coulson said the more he listened to Thurlbeck, the more he started to think there was "some public interest justification" in the story but he wanted time to think about it.
Asked by his lawyer Timothy Langdale QC where he thought the reporter had got the vociemail, Coulson said: "The conversation did not go into detail about that. If I made an assumption, it was Neville had done this himself. It was all coming from Neville."
He added: "I remained shocked - this was the first and only time a voicemail had been played to me."
Later, Coulson said he started to justify pursuing the story on the basis that Mr Blunkett was "distracted" by the affair and he was sharing sensitive information.
He said he took legal advice about the privacy aspect of the story. He concluded it still needed to be stood up but decided that Mr Blunkett was more likely to do so if the NotW did not name his lover.
He said: "I thought, rightly or wrongly, if I suggested to David Blunkett that I would not name Kimberly Fortier, he would be more likely to confirm the story."
Coulson told the court that, looking back, he "should not have handled the story the way I did".
The court heard a tape recording of Coulson's meeting with Mr Blunkett in which he repeatedly protests that he had a policy of keeping his private life private.
He is heard to tell Coulson: "You are asking me to say yes, I have had a relationship with a married woman?"
Coulson replies: "Yes, and nothing more."
Mr Blunkett, who was divorced at the time, says: "You are putting me in a position where my longstanding precept of keeping my private life private is a disadvantage. Whatever I say breaches my precept of keeping my private life private."
During the exchange, Coulson makes the suggestion of keeping Ms Fortier's name out of the story and warns that other newspapers might run it even if the NotW did not.
But Mr Blunkett would only confirm that she was a "very close friend of mine", adding: "I'm not prepared to go into bedroom talk now or in the future."
He said: "I'm concerned about Kimberly and about all my other married friends who do not want to be fingered either."
The court heard that Mr Blunkett released a statement later which appeared in the story the now defunct-tabloid ran.
The day after the News Of The World ran the story, The Sun, which was being edited by Coulson's co-defendant Rebekah Brooks, ran the story but named the Spectator publisher, who is also known as Kimberly Quinn.
Coulson said he would have talked to Brooks about the story the previous Saturday night as it was going to press, but "the idea that we somehow shared the story is not true".
Coulson, 46, of Charing, Kent, is charged with conspiring to hack phones with Rebekah Brooks and former managing editor Stuart Kuttner, and conspiring with former royal editor Clive Goodman to commit misconduct in a public office.
All seven defendants deny charges against them.
The trial continues.