Rupert Murdoch’s powerful U.K. news arm reversed course and admitted its role Friday in a long-running phone-hacking scandal that has thrown into question the prime minister’s judgment and threatened Murdoch’s biggest-ever deal.

News International, parent company of Britain’s top-selling News of the World tabloid, had vigorously denied that it knew journalists were hacking the phones of politicians, celebrities and members of the royal family, blaming a handful of “rogue reporters” for the scandal.

But in a major turnaround for the company, News International — part of Murdoch’s global media empire News Corp. — said Friday it would admit liability and pay compensation in eight cases — although many more people believe they were targeted.

Those who will receive an “unreserved apology” from the group include actress Sienna Miller and politician Tessa Jowell.

The scandal brought into question the judgment of Prime Minister David Cameron, who appointed former News of the World editor Andy Coulson as his head of communications. Coulson ran the paper at the time of the hacking scandal.

Although Coulson has denied knowledge of the hacking scandal, he was forced to resign as Cameron’s media manager this year, saying the focus on the controversy was too great a distraction.

Analysts said the move was an attempt to limit potential financial costs as News Corp. tries to complete its planned $14 billion purchase of pay-TV operator BSkyB — a deal that has angered other British news operators who fear the group’s growing influence over Britain’s media.

“Following an extensive internal investigation and disclosures through civil legal cases, News International has decided to approach some civil litigants with an unreserved apology and an admission of liability,” it said in a statement.

“We have also asked our lawyers to establish a compensation scheme with a view to dealing with justifiable claims fairly and efficiently. . . . We will, however, continue to contest cases that we believe are without merit or where we are not responsible.”

Lawyer Mark Lewis of Taylor Hampton Solicitors, which represents four individuals suing the News of the World — including horse jockey Kieren Fallon — said that he had yet to receive any settlement offers but welcomed the development.

“This is a good stab in the right direction, but it is a long way from being over,” he said. “There are people who don’t even know at this stage that they are victims.”

“This is being driven by business considerations because clearly the reputational damage is just mounting,” media consultant Steve Hewlett said. “The price that they will pay for admitting liability is way lower than the consequences of fighting on all fronts.”

A spokesman for Britain’s Department of Media said the admission would not affect News Corp.’s planned takeover of BSkyB, which is set to be given the green light in the next few weeks by Culture Secretary Jeremy Hunt.

— Reuters