Andy Coulson, the UK Prime Minister David Cameron's former communications chief and former editor of Rupert Murdoch's News of the World, has been found guilty of a charge of conspiring to hack phones after a seven-month trial.
But Rebekah Brooks, the former boss of Murdoch's British newspaper arm and Coulson's predecessor at the News of the World, was acquitted of all charges unanimously by a jury at London's Old Bailey.
The conviction prompted an apology from the prime minister, who said he was wrong to hire Coulson as his media chief in 2007.
I'm extremely sorry that I employed him, it was the wrong decision," Cameron said of Coulson, saying he was making a "full and frank" apology for hiring him.
"I asked him questions about if he knew about phone hacking and he said that he didn't and I accepted those assurances and I gave him the job," said Cameron.
Coulson reportedly showed no emotion as the verdict was read.
On hearing the verdict, Brooks showed little immediate emotion but was led out of the court by a nurse and later rushed through a group of photographers into a taxi.
She was followed by her husband Charlie who was also cleared of any attempt to hinder the investigation. Her former personal assistant, Cheryl Carter, was cleared of all charges as well.
Brooks's lawyer had argued that the prosecution failed to produce a "smoking gun" during her 14 days of intense questioning on the stand, and likened the decision of the authorities to take her to court to a medieval witch-hunt.
Murdoch closed the News of the World, a 168-year-old tabloid, in July 2011 amid a public outcry over revelations that journalists had hacked into the voicemails on the mobile phone of a murdered schoolgirl.
Up to 5,500 victims
The scandal shocked Britain's political elite, with prime ministers from both main parties shown to have been close to Murdoch and his senior staff including Brooks.
Cameron ordered a public inquiry into press ethics in the immediate aftermath.
The 46-year-old Brooks was cleared of being part of a conspiracy to hack into phones to find exclusive stories, of authorising illegal payments to public officials and of trying to hinder the police investigation.
Police said there were probably more than 1,000 victims of hacking, including Queen Elizabeth's grandsons, Princes William and Harry, and William's wife Kate, and possibly as many as 5,500.
Politicians, celebrities, prominent sporting figures and even rival journalists were all targeted in a desperate attempt to find exclusive stories for Britain's top-selling newspaper.
Coulson, who admitted during the trial he had been aware of one hacking incident, said staff had kept the widespread criminal activity from him.
Murdoch's British newspaper operation said it had changed the way it did business.
"We said long ago, and repeat today, that wrongdoing occurred, and we apologised for it. We have been paying compensation to those affected and have cooperated with investigations," a News UK spokesman said.