ISRAELI tax officials today raided a hi tech firm owned by media magnate, Mr Rupert Murdoch, confiscating files and computer data as part of their probe of a suspected £100 million tax evasion case.

A statement from Murdoch's company, News Datacom Research Ltd, rejected the charges as "without merit".

Israel Radio said 70 tax agents raided a factory in Haifa and offices in Jerusalem in one of the largest cases of suspected tax fraud in Israel's history.

The company develops and markets encryption systems for pay television broadcasters, including Murdoch's Sky television and Star TV.

Israel Radio said the sophisticated technology was created locally and smuggled abroad without reporting the transactions to tax officials.

A warrant issued by Jerusalem Judge, Mr Amnon Cohen, said tax authorities were investigating whether seven individuals and four companies had failed to pay £100 million in taxes.

The warrant names Mr Murdoch, who owns a global empire of newspapers, magazines and TV stations, as well as his Israeli company and its parent firm, News Datacom, of London.

The warrant said all were being investigated for "tax transgressions, tax evasion and helping others to evade taxes between the years 1989 and 1996 of an amount of about £100 million".

News Datacom Research (NDR) said in a statement issued in London, New York and in Israel that the company had operated within the law and "filed all required tax returns and paid all applicable taxes".

It said the firm would co operate with Israeli authorities.

"We totally reject the outrageous references and attacks in the media on Mr Rupert Murdoch," said the statement.

It attributed leaks to the media about the investigation to a continuing extortion campaign against the company by former employees who have been sued in Britain by NDC (the Israeli company's parent) for defrauding it of millions of dollars.