Ian Edmondson and Neville Thurlbeck were arrested on Tuesday on suspicion of hacking into voicemail messages (Images: Phil Adams, Rex; Peter Jordan, PA)

The News of the World has finally conceded that the phone-hacking scandal embroiling the paper was more widespread than previously claimed, apologising to eight litigants and announcing that it would set up a fund to compensate some of the victims.

News International, the paper's publisher, made the calculated admission in a statement issued on Friday afternoon. It also conceded that its own initial investigations into phone hacking allegations had been flawed.

By accepting liability and offering an apology in certain cases, the Murdoch-owned tabloid is belatedly seeking to mitigate the damage from the ongoing phone-hacking affair, which is currently subject to a Metropolitan Police investigation, a string of civil proceedings, and ongoing scrutiny from a number of MPs.

"Following an extensive internal investigation and disclosures through civil legal cases, News International has decided to approach some civil litigants with an unreserved apology and an admission of liability in cases meeting specific criteria," the company said.

"[P]ast behaviour at the News of the World in relation to voicemail interception is a matter of genuine regret. It is now apparent that our previous inquiries failed to uncover important evidence and we acknowledge our actions then were not sufficiently robust."

The BBC's business editor Robert Peston reported on Friday afternoon that News International would accept liability in the cases of the actor Sienna Miller, the Labour MP Tessa Jowell, the lawyer David Mills, the designer Kelly Hoppen, the former sports commentator Andy Gray, the former political aide Joan Hammell, the publicist Nicola Phillips, and the sports agent Sky Andrew.

The company reportedly expects that most payouts will be in the region of £100,000. As the number of legal claims rises, News International could find itself with a much larger bill than initially anticipated: but the payoff may be that the News of the World avoids the prospect of a number of high-profile cases going to court.

The announcement came just three days after the News of the World's former assistant news editor, Ian Edmondson, and its current chief reporter, Neville Thurlbeck were arrested on suspicion of unlawfully intercepting voicemail messages. The pair were released on Tuesday afternoon after being questioned and having their homes searched.

Damage limitation, but the affair continues

News International's latest move will not kill off the scandal, as the company itself made clear.

The publisher signalled its intention to fight other phone hacking allegations being brought against the News of the World, stating that it would "contest cases that we believe are without merit or where we are not responsible".

For instance, News International has not accepted liability in relation to claims made by Hoppen, an interior designer and Sienna Miller's stepmother, that her phone may have been hacked as recently as March 2010.

The number of celebrities and public figures identified as being potential victims of phone hacking extends far beyond the eight who have been offered compensation. A total of 24 individuals are now pursuing legal action, while documents seized by Scotland Yard from the private investigator Glenn Mulcaire in 2006 suggest that thousands of individuals may have been earmarked as targets for phone message interceptions.

The High Court issued an order last week instructing the News of the World to hand over hundreds of emails involving employees linked to the scandal. Those communications could shed further light on the extent of phone hacking at the paper.

Moreover, there is no guarantee that all of the eight litigants to whom compensation and admissions of liability have been offered will respond favourably to News International's outreach attempts. Nevertheless, the company may achieve part of its damage limitation objective by reducing the likelihood that embarrassing allegations will come out in court.

News International is not the only organisation with its credibility at stake in the scandal. Scotland Yard has come under fire for its handling of the original police probe, and its acting deputy commissioner John Yates is currently involved in a public dispute with the Crown Prosecution Service about the scope of the investigation.

Keir Starmer QC, the director of public prosecutions, told the home affairs select committee that the CPS did not instruct Scotland Yard to limit the scope of its investigation. Yates has continued to stand by his insistence that CPS instructions were a key reason why the Met had only identified a small number of victims.

Media Spy discussion: News of the World phone-hacking scandal