News Corporation chairman James Murdoch could face a police investigation into claims he gave "mistaken" testimony to the House of Commons this week, deepening the legal crisis that has engulfed the Murdoch family's media empire.

Police confirmed they had received a letter today from Labour MP Tom Watson, who questioned whether Mr Murdoch was involved in illegal efforts to cover up phone hacking.

Detectives, who are investigating the phone hacking scandal centred on the Murdochs' now defunct News of the World, said they were now considering the letter's contents.

Mr Murdoch, chairman of News Corporation's British arm, and his father and company head Rupert appeared before the House of Commons media committee on Tuesday to answer questions on what they knew about the phone-hacking.

The company had long maintained that the practice was the work of a lone "rogue reporter". However, two former senior figures in the company including the last News of the World editor Colin Myler have disputed James Murdoch's claim that he was unaware of an e-mail that suggested as early as 2008 that wrongdoing was more widespread.

"I think this is the most significant moment of two years of investigation into phone hacking," Mr Watson, a persistent critic of News Corporation, told the BBC.

"If their statement is accurate, it shows that James Murdoch had knowledge that others were involved in hacking as early as 2008, that he failed to act to discipline staff or initiate some internal investigation," added Mr Watson who is also a member of the media committee.

"If their version of events is accurate, it doesn't just mean that parliament has been misled, it means the police have another investigation on their hands."

Mr Murdoch has said he stood behind his testimony to the committee and the company said today that this statement still applied.

British prime minister David Cameron, who has come under fire for his close ties to senior News Corporation figures, tried to distance himself from the company.

"Clearly James Murdoch has got questions to answer in parliament and I am sure that he will do that," he told reporters, "and clearly News International has got some big issues to deal with and a mess to clear up.

"That has to be done by the management of that company. In the end the management of a company must be an issue for the shareholders of that company."

Mr Myler and Tom Crone, who was the newspaper group's top legal officer, accused James Murdoch of giving "mistaken" testimony.

Mr Watson said the dispute between senior figures past and present in News Corporation marked a turning point in efforts to get to the bottom of a scandal dating backing to 2005.

"I think we're getting near to the core of this now, we're getting nearer the truth," Mr Watson said.

"People are beginning to speak out. The company effectively closed ranks three years ago. Now that News of the World is gone, now that the world's media hold this company in the spotlight, I think individuals are beginning to speak out and we will get the full picture."

News Corporation long maintained that listening in to voicemails to get stories was the work of a single "rogue reporter" after their royal editor was jailed in 2007.

A series of legal actions by celebrities undermined that defence and raised questions about how far up the company responsibility went.

The floodgates opened two weeks ago when a lawyer for murdered schoolgirl Millie Dowler alleged that her telephone had been hacked while she was missing and messages deleted, giving her parents false hope she was still alive.

Facing public outrage and opposition from long compliant politicians, News Corporation closed the News of the World newspaper after168 years and dropped a $12 billion (€8.4 billion) bid to buy full control of pay TV broadcaster BSkyB .

In a summer scandal shaking the British establishment, London's police chief Sir Paul Stephenson and its head of anti-terrorism also resigned over their links to a former News of the World deputy editor Neil Wallis.

Reuters