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Prime Minister David Cameron has called on News Corp chairman James Murdoch to face further questions from MPs about the phone-hacking scandal that has engulfed his family media empire.

The PM's comments follow Labour MP Tom Watson's formal request that police look into evidence Murdoch gave to the media select committee earlier this week.

Murdoch signed off a reported settlement payment of £700,000 dished out in 2008 by News International to Professional Footballers' Association boss Gordon Taylor, who had filed a damages claim against the now-defunct Sunday tabloid.

Myler and erstwhile News International legal manager Tom Crone, who left the company after the closure of NotW, claimed that Murdoch had been privy to an email with the subject line "for Neville" that contained a transcript of illegally intercepted voicemail messages around the time he authorised the payment to Taylor.

"Just by way of clarification relating to Tuesday's CMS Select Committee hearing, we would like to point out that James Murdoch's recollection of what he was told when agreeing to settle the Gordon Taylor litigation was mistaken. In fact, we did inform him of the 'for Neville' email which had been produced to us by Gordon Taylor's lawyers," said Myler and Crone in a statement.

On Tuesday, at the committee hearing, Murdoch claimed he was unaware of the email in 2008.

However, he did tell MPs including Watson that "there was every reason to settle the [Taylor] case, given the likelihood of losing the case and given the damages – we had received counsel – that would be levied."

PM Cameron, according to the BBC, said the News Corp chairman still had "questions to answer in Parliament and I'm not sure he will do that".

Watson, meanwhile, said he would formally ask Deputy Assistant Sue Akers, who is heading up Scotland Yard's Operation Weeting investigation into the phone-hacking scandal, to consider the conflicting evidence.

"This is the most significant moment of two years of investigation into phone hacking," the MP told the Beeb this morning.

"If [Myler and Crone's] statement is accurate, it shows James Murdoch had knowledge that others were involved in hacking as early as 2008. It shows he failed to act to discipline staff or initiate an internal investigation, which undermines Rupert Murdoch's evidence to our committee that the company had a zero tolerance to wrongdoing.

"More importantly, it shows he not only failed to report a crime to the police, but because there was a confidentiality clause involved in the settlement it means that he bought the silence of Gordon Taylor and that could mean he is facing investigation for perverting the course of justice."

Last night News Corp issued a terse statement from James Murdoch in which he simply said: "I stand behind my testimony to the Select Committee."

On Tuesday, Rupert Murdoch told the media committee that he hired Myler at the News of the World – in the newspaper tycoon's own words – to "find out what the hell was going on. That is my understanding of it. I cannot swear to the accuracy of it."

Myler's editorship at the NotW followed the departure of Andy Coulson, who edited the paper from 2003 until early 2007 when royal editor Clive Goodman was jailed for illegal phone hacking. Coulson, who was recently arrested by Met police, later became Cameron's communications director. Earlier this week the prime minister admitted he regretted that appointment. ®

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