Coulson got News International cash while working for Tories

Former News of the World editor Andy Coulson was paid by the paper's parent company while working as the Tories' spokesman, the BBC has learned.

News International paid the Conservatives' former communications director a severance package worth several hundred thousand pounds.

Labour said the issue raised "serious questions", but the Tories said they had no prior knowledge of the deal.

Mr Coulson was arrested earlier this year in connection with phone hacking.

BBC business editor Robert Peston said the instalments received by Mr Coulson totalled the full entitlement under his two-year contract as editor of the now closed tabloid.

The severance package also allowed him to keep hold of his company car, our correspondent revealed, and allowed him continued access to healthcare.

Mr Coulson was hired by the then opposition Conservative party in July 2007 for a reported salary of £275,000.

He had quit as NoW editor six months earlier when its royal editor Clive Goodman and private investigator Glenn Mulcaire were jailed for hacking into the voicemails of Buckingham Palace staff.

Mr Coulson resigned from his government post in January, saying pressure over phone hacking was distracting him from his role.

Then last month he was arrested on suspicion of corruption and phone hacking and released on police bail until October.

Commenting on Mr Coulson's severance deal, a Tory spokesman said: "We were not aware until last night of allegations that Andy Coulson's severance package, agreed with News International before he was employed by the Conservative Party, was paid in instalments that continued into the time he was employed by the Conservative Party.

"Any payments made to Andy Coulson as part of his severance package with News International would not constitute donations in kind to the party as they were linked to his previous employment with NI, not with the Conservative Party."

The spokesman said severance payments were "a private matter", adding: "It is not part of the HR process to discuss severance payments from previous jobs with potential employees."

Meanwhile, the Electoral Commission said it had received a letter from Labour MP Tom Watson, who has asked the watchdog to investigate whether the News International payments complied with British laws.

The commission said it would be responding to the request.

Mr Watson, said: "Given that Andy Coulson resigned in disgrace from the News of the World over the phone-hacking scandal, he took responsibility for what happened on his watch - his words, not mine - it seems remarkable that News International would feel obliged to give him any payments at all.

"And if those payments were discretionary then I think in law they would count as a hidden donation."

A Labour spokesman said: "David Cameron now faces allegations that one of his top advisers was also in the pay of News International.

"There are serious questions to answer about Mr Coulson's employment in Downing Street and the country should not have to wait for full transparency."

BBC political correspondent Robin Brandt said there was some scepticism about the timing of the story on the day the world was so focussed on events in Libya.

He said some critics who argued it had raised further questions about Mr Cameron's judgement were suggesting the information may have been conveniently "leaked out".

A News International spokesman said: "News International consistently does not comment on the financial arrangements of any individual."