Stephenson quits as head of Scotland Yard

Former Scotland Yard commissioner Sir Paul Stephenson (EPA)

The phone-hacking scandal last night claimed its most high-profile casualty when Sir Paul Stephenson, Britain's most senior police officer, resigned as Metropolitan Police Commissioner.

Sir Paul stepped down amid growing anger at the failure by Scotland Yard to reveal that it had paid former News of the World deputy editor Neil Wallis as a public relations adviser at a time when the force was being criticised for its failure to reopen its investigation into alleged criminality at the defunct Sunday newspaper.

In a televised statement, the Commissioner insisted that he had been unaware of documents seized from private investigator Glenn Mulcaire which now suggest widespread phone hacking at the NOTW and that he had no grounds for suspecting any alleged involvement of Mr Wallis, who was arrested last Thursday on suspicion of voicemail interception.

Acknowledging that his contacts with the former NOTW executive could nonetheless hamper current investigations, Sir Paul said: "I have heard suggestions that we must have suspected the alleged involvement of Mr Wallis in phone hacking. Let me say unequivocally that I did not and had no reason to have done so."

Sir Paul took the senior role in British policing following the resignation of Sir Ian Blair in September 2008. Sir Ian stepped down amid a crisis of confidence in his leadership following the shooting of Jean Charles de Menezes, who was mistaken by police for a terror suspect. The de Menezes family are among the victims of the phone-hacking scandal.

Sir Paul faced further criticism yesterday over his relationship with Mr Wallis – deputy editor at the News of the World under Andy Coulson, who was arrested earlier this month. It emerged that not only had the Yard employed Mr Wallis but Sir Paul had personally enjoyed a period of recuperation at the luxury Champneys spa, a client of the Outside Organisation, the PR firm where Mr Wallis now works.

A Home Office spokesman said Home Secretary Theresa May had told Sir Paul she was "sorry" that he was resigning when he called to inform her of his decision.

Mayor of London Boris Johnson said he had "absolutely no reason to doubt his integrity". He had been persuaded to accept the resignation as Sir Paul thought it would be "a serious distraction" in the run up to the Olympics.

There are no imminent plans to announce a permanent successor.