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Daniel Evans told London's Old Bailey Court he had been a prolific phone-hacker and that Andy Coulson, one of Murdoch's ex-editors and later Prime Minister David Cameron's media chief, had known what he did before employing him.
He is the fourth former journalist from the News of the World to have admitted conspiracy to hack phones, but the first from the rival Sunday Mirror title.
Giving evidence at the trial of Coulson and another ex-Murdoch editor, Rebekah Brooks, on charges of conspiracy to hack phones, Evans confirmed he had pleaded guilty last September to the same charge.
He also confirmed he had admitted conspiracy to commit misconduct in a public office, intending to pervert the course of justice and that he had entered into an agreement with prosecutors last August.
Legal restrictions have meant his plea could not be reported until now, and shares in Mirror publisher Trinity Mirror closed down almost 4 percent.
Evans' dramatic testimony came after British film star Jude Law appeared in the witness box and told the court the press seemed to know an "unhealthy amount" about his private life.
Evans, 38, told a hushed courtroom he had hacked into the phones of celebrities, having been shown the trick by a figure at the Sunday Mirror tabloid where he got a staff job in 2003.
Asked what his role had entailed, he told the court: "Principally I was tasked with newsgathering ... and latterly with hacking people's voicemails."
In 2005, a former colleague who knew of his hacking skills, James Weatherup, offered him a job at the now-defunct News of the World. Initially he declined, telling the court he did not want to be Weatherup's "pet phone-hacker".
A few months later, another journalist from the News of the World who also was aware of Evans' "dark art" skills approached him about a job, and he told the court he had met up with him and Coulson at a hotel in central London.
Evans said when he told Coulson he could use phones to bring in exclusive stories cheaply, it was the "Ker-Ching moment".
"Andy knew what the context of it was," he told the jury.
Weatherup has already admitted conspiracy to hack phones, the court has heard. Coulson has denied all knowledge.
HACKING MOST DAYS
The trial of two of the most high profile editors in British history began in October and is likely to run until May. The allegation that journalists had hacked into thousands of phones to generate stories, and the subsequent closure of the tabloid, sent shockwaves through the industry.
Evans, who gave evidence for over two hours and who will return on Tuesday, said he moved across to Murdoch's rival Sunday tabloid with an extensive list of numbers and details he used to hack the phones of celebrities and their publicists.
On his first day at the News of the World, he was given a list of names and tasked with hacking those he thought would be of interest.
Asked by prosecutor Andrew Edis if he had hacked many names on a list, Evans replied: "I did, yeah", adding he had targeted about a couple of hundred people, making more than a thousand calls to their voicemails.
When asked how often he did it, he said: "Probably most days." He later said he had probably hacked more phones while working at the Sunday Mirror.
Trinity Mirror said in a statement on Monday: "We do not tolerate wrongdoing within our business and take any allegations seriously. It is too soon to know how this matter will progress and further updates will be made if there are any significant developments."
Coulson, who went on to become Cameron's media spokesman before quitting in 2011, and Brooks, who later ran News Corp.'s British newspaper arm News International, are on trial accused of conspiring to illegally intercept voicemail messages on mobile phones.
Brooks and Coulson are also accused of authorising illegal payments to public officials while Brooks faces charges of perverting the course of justice by attempting to conceal evidence from police.
Brooks, Coulson, and five others on trial deny all the charges.