Staff at the News of the World have reacted with shock to news that it will be closed after this Sunday's edition.
The paper's political editor, David Wooding, said the closure came as a "bombshell".
The 168-year-old tabloid is accused of hacking into phones of crime victims, celebrities and politicians. Police have identified 4,000 possible targets.
The Guardian reports Andy Coulson, formerly David Cameron's director of communications, will be arrested later.
It says Mr Coulson will be arrested over suspicions that he knew about, or had direct involvement in, the hacking of mobile phones during his time as editor of the News of the World (NoW).
He has insisted that he knew nothing about the practice.
Staff said they were stunned after News International chairman James Murdoch announced on Thursday that the NoW would shut, after days of increasingly damaging allegations.
The paper's editor Colin Myler said the news was "the saddest day of my professional career".
Mr Wooding, who joined the NoW 18 months ago, said the paper was "fantastic" and "decent, hard-working, distinguished journalists were all carrying the can for the sins of a previous regime".
Columnist Carole Malone added: "What's really tragic is that everyone in that room had nothing to do with what went on in the past."
In a statement made to staff, Mr Murdoch said the good things the paper did "have been sullied by behaviour that was wrong - indeed, if recent allegations are true, it was inhuman and has no place in our company".
"The News of the World is in the business of holding others to account. But it failed when it came to itself."
He said no advertisements would run in this weekend's paper - instead any advertising space, and the proceeds from sales, would be donated to good causes.
Mr Murdoch reiterated that the company was fully co-operating with the two ongoing police investigations.
Downing Street has said it had no role or involvement in the decision to close.
News International has declined to comment on reports that the Sun could now become a seven-day-a-week operation.
The NoW, which sells about 2.8 million copies a week, is famed for its celebrity scoops and sex scandals.
There have been repeated calls for Rebekah Brooks - the former editor, now News International's chief executive - to resign.
But in an interview Mr Murdoch stood by her again, saying he was satisfied with her conduct.