Rebekah Brooks took just ten minutes to authorise a £4,000 payment to a public official for bikini pictures of Prince William dressed as a Bond girl at Sandhurst, a jury heard.
The court also heard that The Sun paid an MOD press officer £100,000 for a string of stories.
The Old Bailey heard that Brooks, then editor of the Sun and known as Rebekah Wade, was asked for her opinion on paying a member of the armed forces for the story.
Less than 10 minutes after she was sent an email by a Sun news editor saying the military contact who was offering the picture wanted £4,000, she responded by saying "OK", the jury heard.
It led to a page seven exclusive in The Sun in September 2006 with the headline "Willy in a Bikini" together with a mocked-up picture of the prince wearing a green swimsuit and Hawaiian-style flowers.
The article claimed that "Prince William caused a stir at a Sandhurst 007 bash by dressing as a Bond Girl" and said his girlfriend Kate Middleton dressed in a wetsuit.
The court heard that a payment dated 16 June 2006 and headed "Prince William wearing a bikini exclusive" for the amount of £4,000, to be collected by the wife of the member of the armed forces, was made at a Thomas Cook branch in Slough, Berkshire.
The Sun reporter who was working on the story told his superior in the email later forwarded to Brooks that the picture had come via his "best contact at Sandhurst".
He claimed that although £4,000 "sounds like a lot", it would "open the door for future exclusives and info", the jury heard.
"I'm worried if we don't meet his demands, this opportunity will pass," he said.
The court heard that the email sent by the reporter to the Sun news editor on 15 June 2006 referred to his contact brokering the deal to hand over the picture, which was in the possession of William's platoon commander.
The reporter wrote: "He (the contact) assures me this is not the way we would normally operate but we will not be let down.
"Indeed I already have the guy with the picture over a barrel because I know his identity."
Police initially believed the platoon commander to be Major Alexis Roberts, (pictured above. Credit Reuters) who was acting as William's superior at the military academy when the story broke.
But after further investigation, officers working under the Operation Elveden inquiry into corrupt payments realised that another man, Alex McKay, was the Prince's platoon commander at the time the picture was taken.
Roberts, who was described as "extremely close" to William, was killed while on duty in Afghanistan, the court heard.
In his email, the Sun reporter made reference to the platoon commander needing to pay for a course that his wife was going to attend.
But after interviewing Roberts's widow, they concluded this could not be referring to her or her husband as she was not due to attend a course and was heavily pregnant at the time.
Jonathan Laidlaw QC, representing Brooks, asked Operation Elveden investigator Detective Inspector David Kennett whether police had considered the possibility that there was a third, unidentified person involved in the deal.
"I certainly didn't read it like that," Kennett said.
Prosecutor Andrew Edis QC asked the officer if the Army offered a "facility" for McKay to return to be interviewed about his possible involvement.
Kennett replied: "I have been informed that the Army will not post a soldier back into what is called jeopardy."
He also told the court that some 60 officers are working on Elveden.
Major Julia Parke-Robinson, a Royal Military Police officer with responsibility for female cadets at Sandhurst in 2006, told the court that she saw William dressed as a Bond girl in a green bikini at a party in April that year.
She explained that "100 plus" cadets attended the event and were allowed to bring a guest, with William inviting his then girlfriend Kate Middleton.
Parke-Robinson said the Prince's friends also wore similar costumes to the party, which was intended to test cadets' organisational skills.
The jury was also told of a string of emails between another Sun reporter and Brooks in which she authorised money to be paid to his "number one military contact" following "massively picked up" exclusive stories.
The court heard that Brooks repeatedly approved via email what the reporter described as "good value for money" payments ranging between £500 and £4,500 to his source.
Although he did not refer to her by name in the emails, the court heard that money was paid to Ministry of Defence press officer Bettina Jordan-Barber.
Jordan-Barber, who was employed by the MoD since 1997 and had a high level of security clearance, received a total of £100,000 for information she provided to The Sun, the jury was told.
Former News International chief executive Rebekah Brooks, 45, of Churchill, Oxfordshire; ex News of the World editor Andy Coulson, also 45, from Charing in Kent; former NoW head of news Ian Edmondson, 44, from Raynes Park, south west London; and the tabloid's ex-managing editor Stuart Kuttner, 73, from Woodford Green, Essex, are all on trial accused of conspiring with others to hack phones between 3 October 2000 and 9 August 2006.
Former NoW and Sun editor Brooks is also accused of two counts of conspiring with others to commit misconduct in public office – one between 1 January 2004 and 31 January 2012 and the other between 9 February 2006 and 16 October 2008 – linked to alleged inappropriate payments to public officials.
She faces another two allegations of conspiracy to pervert the course of justice – one with her former personal assistant Cheryl Carter, 49, from Chelmsford in Essex, between 6 July and 9 July 2011; and a second with her husband, Charles Brooks, and former head of security at News International, Mark Hanna, and others between 15 July and 19 July 2011.
Coulson is also facing two allegations that he conspired with former NoW royal editor Clive Goodman, 56, from Addlestone in Surrey, and other unknown people to commit misconduct in public office – between 31 August 2002 and 31 January 2003, and between 31 January and 3 June 2005.
All of the accused deny all of the charges.
The trial was adjourned until Monday.