Vince Cable, the business secretary, was humiliated after lashing out at News Corporation while speaking with undercover reporters (Source: Getty)

Britain's business secretary Vince Cable was humiliatingly stripped of his powers over media and communications policy yesterday, after he was caught on tape proclaiming that he had "declared war" against Rupert Murdoch.

Cable, the second-most senior Liberal Democrat in the Government, narrowly escaped being sacked by David Cameron following crisis talks at Downing Street.

But he will no longer have responsibility for overseeing competition or policy issues relating to the media, including News Corporation's controversial proposal to take full control of the subscription television giant BSkyB. Those powers will now go to the culture secretary Jeremy Hunt, a Conservative.

"[A]ll responsibility for competition and policy issues relating to media, broadcasting, digital and telecoms sectors will be transferred immediately to the secretary of state for culture, media and sport," Downing Street said in a statement.

"The prime minister is clear that Mr Cable's comments were totally unacceptable and inappropriate."

'I have declared war on Mr Murdoch'

Cable's remarks, made during a conversation with undercover reporters from The Daily Telegraph, contain a series of incendiary statements about News Corp and its planned takeover of Sky. The transcript was first posted online by the BBC's business editor Robert Peston.

"I am picking my fights, some of which you may have seen, some of which you may haven't seen," Cable told the reporters.

"And I don't know if you have been following what has been happening with the Murdoch press, where I have declared war on Mr Murdoch and I think we are going to win."

He went on to say that while he could not "politicise" the process of determining whether the News Corp-Sky deal could go ahead, his position as business secretary gave him the ability to place News Corp under heavy pressure.

"I have blocked it using the powers that I have got and they are legal powers that I have got. I can't politicise it but from the people that know what is happening this is a big, big thing," he said.

"His whole empire is now under attack... So there are things like that we do in government, that we can't do... all we can do in opposition is protest."

After the transcript was published, News Corp issued a statement saying that it was "shocked and dismayed" by Cable's admissions, adding that they raised "serious questions" about the business secretary's impartiality.

The emergence of the recording made for yet another dramatic day in the coalition's short history, exposing more divisions in the Tory-LibDem alliance and resulting in the public humiliation of one of the LibDems' most prominent voices.

How was the Telegraph beaten to its own exclusive?

Cable's views had already come under the spotlight in the morning edition of The Daily Telegraph. The newspaper revealed that in his discussions with the undercover reporters, Cable said that he could "walk out of the Government and bring the Government down": a threat that he described as the "nuclear option".

But the paper has been forced to defend its coverage of the Cable revelations, after questions were raised as to how the paper managed to be beaten to its own exclusive.

Two reporters from the Telegraph recorded the blunt conversation with Cable. But while the paper published what it said was a "full transcript" of the conversation on its website, the transcript excised Cable's explosive remarks on News Corp.

It was left to the BBC's Peston to reveal what the business secretary had said about News Corp. Peston posted the elided comments on his BBC blog on Tuesday afternoon, saying that "a whistleblower has passed me the full interview".

The Telegraph denied suggestions that its opposition to the News Corp-Sky proposal was the reason why it had not published the transcript of Cable's remarks. The paper was one of several outlets that put their names to a letter calling for the bid to be stopped.

"It is utter nonsense to suggest that the Daily Telegraph did not publish the comments from Vince Cable on the Rupert Murdoch takeover of BSkyB for commercial reasons. It was an editorial decision to focus this morning on Cable's comments on the coalition because they were of wider interest to our readers," said Tony Gallagher, the publication's editor.

"We have made it clear, in the paper, online and in broadcast interviews today, that we would be publishing further comments in the forthcoming days. In the event, the story was put on the Telegraph website shortly after 3pm this afternoon."

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