The Sun's royal editor was arrested today by detectives investigating alleged illegal payments to public officials, sources said.
Duncan Larcombe, 36, was held in a dawn swoop on his home in Kent on suspicion of conspiracy to corrupt and conspiracy to cause misconduct in a public office.
Officers from Scotland Yard's Operation Elveden also arrested a former member of the armed forces, 42, and a woman, 38, at their house in Lancashire.
The arrests were made at approximately 6am this morning by officers from the Met's Operation Elveden, the investigation into allegations of illegal payments to police and public officials.
Police said today's arrests were prompted by information provided by News Corporation's management standards committee (MSC), which was set up in the wake of the phone-hacking scandal that led to the closure of the News of the World last July.
Larcombe worked at the Kent and Sussex Courier for three years after leaving university before becoming a Sun staff reporter in October 2002.
He was the paper's royal correspondent from 2005 to 2009, then was appointed defence editor for 14 months. He returned to the royal beat in January last year.
Giving evidence to the Leveson Inquiry into press standards in January, Larcombe said he had never paid a police officer and had no knowledge of phone-hacking or computer-hacking taking place at The Sun.
But he acknowledged it was "no secret" that his paper offers members of the public payments in return for tip-offs.
He said in a written statement to the inquiry: "There have been several occasions when I, as royal editor, have paid people money for stories or pictures that have ended up in the paper.
"Some of these people have become regular 'tipsters' while others may only have been a one-off.
"In all cases, payments have to be authorised by the news desk as our line managers. If the payment is more than £1,000, it is my understanding that the payment then has to be authorised personally by the editor or the managing editor.
"In the vast majority of cases, the payments are made to known and trusted sources with a proven track record."
The journalist added: "I have always seen it as an immense privilege to work on a national newspaper and have tried to conduct myself in an ethical manner."
Larcombe was questioned at a police station in Kent while officers searched his home.
The former serviceman was arrested on suspicion of misconduct in a public office and the woman on suspicion of aiding and abetting misconduct in a public office. They are being questioned at a police station in Lancashire.
Scotland Yard said in a statement: "Today's operation is the result of information provided to police by News Corporation's management standards committee.
"It relates to suspected payments to a public official and is not about seeking journalists to reveal confidential sources in relation to information that has been obtained legitimately."
The MSC is carrying out internal investigations relating to Rupert Murdoch's remaining UK papers - The Sun, the Times and the Sunday Times - and is working closely with the detectives investigating alleged phone-hacking and corrupt payments to police and other public officials.
A total of 26 people have now been arrested since last July as part of Operation Elveden, which is linked to the Metropolitan Police's continuing phone-hacking investigation Operation Weeting.
The Crown Prosecution Service confirmed yesterday that it has received the first set of files from police relating to the inquiries.
Sources said former News International chief executive Rebekah Brooks is one of 11 suspects named in the documents handed to Director of Public Prosecutions Keir Starmer QC for him to decide whether to bring charges.
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