Former home secretary Alan Johnson had "no appetite" for police to review Scotland Yard's original police phone-hacking investigation, the Leveson Inquiry was told today.
Sir Denis O'Connor, the Chief Inspector of Constabulary, said he advised Home Office officials there should be an independent review after a July 2009 Guardian story alleged the illegal interception of voicemails was far more widespread than previously believed.
He told the press standards inquiry that the idea of getting Her Majesty's Inspectorate of Constabulary (HMIC) involved was discussed with ministers and the then Home Secretary, but that it "never really got off the ground".
Scotland Yard's original phone-hacking investigation resulted in News of the World royal editor Clive Goodman and private investigator Glenn Mulcaire being jailed in January 2007 after they admitted intercepting voicemail messages left on royal aides' phones.
But the Metropolitan Police was widely criticised for failing to reopen the probe after the Guardian published an article on July 9 2009 alleging there were more journalists and many more victims involved in the case.
Sir Denis said he had a discussion about the report with a Home Office civil servant on the day it was published. "I said, looking at this, that I thought the revelations merited some form of independent review," he told the inquiry.
"I thought that the allegations that were there, if true in any degree, would raise substantial public confidence issues, and I would not be surprised if the HMIC were asked to assist in some way to facilitate such an approach...
"I think there was a second - again in the margins of other business - conversation with another, more senior official.
"But my understanding was that, as with a number of other options, discussions ensued with ministers and the Home Secretary at the time, and there was no appetite for the HMIC being involved.
"So it never really got off the ground, sadly."
Guardian report 'certainly wasn't a trivial matter'
Former Metropolitan Police assistant commissioner John Yates faced criticism over his decision not to reopen the hacking investigation in the light of the Guardian article.
Yates earlier told the inquiry that he was "good friends" with former News of the World executive editor Neil Wallis.
Met Assistant Commissioner Cressida Dick today said the Guardian report "certainly wasn't a trivial matter" and suggested that Mr Yates should have alerted then-commissioner Sir Paul Stephenson to his close relationship with Mr Wallis before he examined the paper's allegations.
She told the inquiry: "If you do think you have any conflict, then you have to discuss it with the boss, and so that's what I think I would have done...
"I don't know how much Sir Paul knew about the relationship, but I think at a minimum a conflict like that should be discussed."
The senior policewoman added: "I was completely and totally unaware of that relationship at that time.
"It was not discussed with me at the time. Indeed I had actually never heard of Mr Wallis until early 2011."
Dick also told the inquiry that Boris Johnson's deputy Kit Malthouse three times questioned the resources devoted to Scotland Yard's new phone-hacking investigation.
She reminded Malthouse that it was for her to make the decision, not him, because British police are operationally independent.
Sir Paul told the inquiry last week that the deputy London Mayor complained about the level of resources allocated to the investigation because of a "political and media-driven 'level of hysteria'".
Dick said Malthouse, chairman of Scotland Yard's former governing body the Metropolitan Police Authority (MPA), voiced his concerns after police launched a new phone-hacking probe in January 2011.
She told the inquiry: "On a couple of occasions Mr Malthouse, I thought jokingly, said to me, 'I hope you're not putting too much resources into this, Cressida'.
"On the third occasion when he said it again, I said, 'well, that's my decision and not yours, and that's why I'm operationally independent'.
"We then went on to have a perfectly reasonable sort of conversation about where the public interest lay."
Dick said she wanted to "put down a marker" for Malthouse so that he and the police investigation were not compromised if it was ever suggested that officers had bowed to political pressure.
A spokeswoman for Malthouse said: "The job of the chair of the MPA and now, the deputy mayor for policing, is to question and probe the resource allocation decisions of senior police officials in order to secure an efficient and effective police force for London.
"It was entirely proper, as Assistant Commissioner Cressida Dick noted, for Kit Malthouse to probe the reasoning behind the allocation of resources into the phone hacking inquiry.
"Mr Malthouse has questioned the allocation of resources by the Metropolitan Police Service in any number of areas, including knife crime, rape, murder and gangs. His job is to hold the Met Police to account.
"The Mayor has made it clear that the phone hacking investigation has to be pursued relentlessly and thoroughly."
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