Rupert Murdoch's plan to replace the scandal-hit News of the World (NotW) with the Sun on Sunday newspaper has been postponed after three of his serving senior Sun journalists were arrested.
Police swooped on the three men, thought to be executive editor Fergus Shanahan, head of news Chris Pharo, and crime editor Mike Sullivan, on 29 January.
They were arrested in Scotland Yard's Operation Elveden, which is looking into illegal payments of police officers by journalists.
Two other men were arrested, Graham Dudman, former managing editor of the Sun, and a unnamed 29-year-old detective.
According to the Financial Times, "Project X" as it is known in News International (NI), is on hold because of the renewed negative publicity around the company, amid fears it would hinder the new publication's launch.
It had recently emerged that News Corporation, of which NI is a subsidiary, was planning to launch the Sun on Sunday on 29 April and Murdoch was shown drafts of the new publication.
It was thought former NotW staff would have roles in the publication.
NotW, a profitable newspaper, was closed by Murdoch in July after increasingly shocking revelations about phone hacking emerged, including claims that murdered schoolgirl Milly Dowler's voicemails were hacked and deleted - a claim since retracted.