David Cameron’s communications chief has insisted he never approved phone hacking during his four years as editor of the News of the World.

Andy Coulson, the Conservative Party’s director of communications, said he knew nothing about phone hacking by former royal editor Clive Goodman, who was jailed for two years after pleading guilty to hacking into the phone messages of royal staff.

He was giving evidence to the Commons Culture, Media and Sport Committee, which is investigating newspaper ethics following reports that other journalists may also have been involved in phone tapping.

But MPs resisted attempts by the News of the World’s lawyers to have Black Country MP Tom Watson (Lab West Browmich East) thrown off the committee while the investigation takes place.

Tom Crone, legal adviser at News International, the newspaper’s publisher, threatened to complain to the Parliamentary authorities if Mr Watson was part of the inquiry.

He claimed it was “quite improper” for the MP to take part, because he was involved in legal action with the News of the World’s sister paper, The Sun.

But Mr Watson refused to step down, saying: “I happen to think this is News International trying to interfere with the work of this Committee.”

The inquiry was prompted by claims in The Guardian newspaper that Mr Goodman was not the only News of the World journalist involved in phone hacking, for which private investigator Glen Mulcaire was also jailed. News International, the NotW’s parent company, was also reported to have paid out a million pounds in civil damages.

The Guardian alleged that “thousands” of public figures – including celebrities and a Royal aide – were targeted with hacking.

Mr Coulson said he had no recollection of it being used when he was News of the World editor.

“During that time I neither condoned the use of phone-hacking and nor do I have any recollection of instances when phone-hacking took place,” he said.

“My instructions to the staff were clear – we did not use subterfuge of any kind unless there was a clear public interest in doing so. They were to work within the Press Complaints Commission (PCC) code at all times.”

Mr Coulson said his staff attended PCC seminars and were given regular refreshers with company lawyers.

He went on: “I gave the reporters freedom as professional journalists to make their own judgments and I also gave them plenty of resources.

“We spent money in pursuit of stories at the News of the World, more money than most newspapers, and I make no secret of the fact.”

But he insisted he only ever concentrated on a “handful of stories” that the paper was working on.

“I wasn’t able to micro-manage every story and nor did I attempt to,” he said.

He said he had no knowledge of the paper’s recent settlement with Gordon Taylor, the chief executive of the Professional Footballers’ Association.

Current editor Colin Myler told MPs he had introduced “rigorous” safeguards to prevent a repeat of the scandal.