The MP who secured this week's dramatic parliamentary debate into the phone hacking scandal claimed the closure of the News of the World was an attempt to protect News International chief executive Rebekah Brooks.
Chris Bryant, who is taking legal action against the newspaper over claims his phone was hacked, said Ms Brooks should have resigned over allegations that murdered schoolgirl Milly Dowler's phone was hacked when she was editor.
The Labour MP said: "This is designed to try and protect Rebekah Brooks, and I believe that if she had a shred of decency after what we have heard about Milly Dowler's phone being hacked, which happened on her watch as editor, she should have resigned by now.
"Everything that's been announced today just goes to show that there's been a cover-up, that Parliament has been misled, that police have been corrupted, that police investigations were undermined.
"This strategy of chucking first journalists, then executives and now a whole newspaper overboard isn't going to protect the person at the helm of the ship."
Former News of the World editor Piers Morgan spoke of his shock on Twitter.
He wrote: "Shocked and saddened by closure of the News of the World. Scandals of past week indefensible, but has been a great British newspaper."
Shadow culture secretary Ivan Lewis said current News of the World staff were paying the price for the mistakes of the past.
"There are some really good guys who work at the News of the World right now. I feel very sorry for those people. They are paying the price for the past," he said.
"They are paying the price for a company at the highest levels that was so arrogant, so failed in its responsibilities to take the allegations seriously and clean out the stables.
"The closure of the News of the World should not allow those people to remove themselves from facing up to the responsibilities they have for what has taken place on their watch."
Publicist Max Clifford said the paper was closed to protect the reputation of Rupert Murdoch's wider media empire, which includes newspapers and TV stations around the world.
"I think the cancer, in News International terms, was too deep and had spread too far to be checked. So they let the patient die because it couldn't be saved," he said.
"They were obviously aware of not only the tremendous damage done to the News of the World but also News International by recent allegations.
"My belief is that there is a lot more to come - I think that is why the decision was taken to pull the plug."
Mr Clifford himself brought a private case against the News of the World over the hacking of his phone and received a reported settlement of £1 million.
Having worked with the paper for 40 years, he said he had a "love-hate relationship" with it.
"I just feel very sorry for (editor) Colin Myler and the staff of the News of the World who had absolutely nothing to do with any of these things. They are paying the price for their predecessors," he said.
"But you can totally understand why they have done what they have done because they are hoping the pressure will now ease off News International."
Mr Clifford said he would buy a copy of the final News of the World on Sunday and predicted it would be "the biggest edition for years, if not forever".
Tory MP Zac Goldsmith, who takes n interest in media affairs, welcomed the paper's closure.
"It has got to be a good day for Britain. I think the News of the World as an organisation is toxic on almost every level. I think the country after Sunday will be a better place," he told the PM programme.
"It is an organisation which has corrupted our political system, it has made it impossible for people to have faith in our police.
"I think it weakened parliament systematically over the years, particularly governments, it has damaged democracy and I think its very existence has de-civilised society."
Michelle Stanistreet, general secretary of the National Union of Journalists, said: "This shows the depths to which Rupert Murdoch and his lieutenants at News International are prepared to stoop.
"The announcement James Murdoch should be making today is the dismissal of Rebekah Brooks as chief executive of News International.
"The shocking revelations this week show beyond doubt the systemic abuse and corruption within the operation ran by both Rebekah Brooks and Andy Coulson. Yet News International has persistently lied about the extent of this scandal and tried to pass it off as a problem created by a couple of rogue reporters.
"Closing the title and sacking over 200 staff in the UK and Ireland, and putting scores more freelances and casuals out of a job, is an act of utter cynical opportunism.
"Murdoch is clearly banking on this drawing a line under the scandal, removing an obstacle to the BSkyB deal, and letting his senior executives off the hook. That simply won't wash. It is not ordinary working journalists who have destroyed this paper's credibility - it is the actions of Murdoch's most senior people.
"James Murdoch was absolutely right when he said in his statement today that 'Wrongdoers turned a good newsroom bad'.
"The closure of the News of the World - a newspaper that has been in print now for 168 years - is a calculated sacrifice by Rupert Murdoch to salvage his reputation and that of News International, in the hope that readers will switch allegiance to a new seven-day operation at The Sun, the Government will wave through the BSkyB deal and he will widen his grip on the UK's media landscape.
"It is ironic that 25 years after the Wapping dispute it is the behaviour of Rupert Murdoch and his management that has caused the closure of the newspaper.
"The NUJ will offer all support to its members at the News of the World facing compulsory redundancies and will be organising an emergency meeting of all journalists at the title to offer advice and support."
Rose Gentle, whose son Fusilier Gordon Gentle was killed in Iraq in 2004, had called for the News of the World to be closed down amid suspicions that her phones had been targeted.
On hearing the news today, she said she was "glad" the paper will close.
She said: "The News of the World are the only journalists that we ever had bad dealings with.
"I'm glad that they're gone, but it doesn't mean we're going to give up the fight to find out if our families' phones were hacked."
Former deputy prime minister Lord Prescott, one of the alleged victims of phone hacking, said that closing the paper would not resolve the problems at News International.
"Cutting off the arm doesn't mean to say you've solved it. There is still the body and the head and the same culture and that's why there has be a public inquiry into it," he said.
"I cannot accept for a moment that at the top of the company, Mr Murdoch - certainly Rebekah Brooks - didn't know what was going on.
"Now some poor suckers on the News of the World are now going to be put on the dole simply because they've decided to make a cost-cutting exercise which they said they were going to do a week or so ago."