Colin Myler told MPs he had written to journalists warning them that failure to comply with the industry code of conduct or the law would result in disciplinary action and possible dismissal.
He also insisted there was no evidence of complicity with phone hacking by any News of the World employee other than former royal editor Clive Goodman.
Mr Goodman left the paper after being jailed in 2007 for involvement in the hacking of voicemails on the phones of royal aides.
The then editor, Andy Coulson, resigned. He has since become the Conservative Party's director of communications.
Mr Myler told the Commons Culture, Media and Sport Select Committee today he had introduced "rigorous new safeguards" when he took over as editor in January 2007.
He said he had emailed and written to all staff setting out the Press Complaints Commission (PCC) code of practice and data protection compliance requirements.
The "relevant clause" in staff contracts had also been re-written so that it was "emphatically stronger and broader", he said.
He said failure to comply with the PCC code would result in disciplinary proceedings and possibly summary dismissal.
Other procedures to prevent the phone hacking situation arising again included "strict protocols" and auditing of cash payments, regular training on legal issues and seminars with the PCC.
Mr Myler said cash payments for stories and tip-offs had been reduced during his editorship by between 82% and 89%.
"The News of the World continues to work with its journalists and its industry partners to ensure they fully comply with the relevant legislation and the rigorous requirements of the PCC code of practice," he told the committee.
Mr Myler also said previous comments made by former News International executive Les Hinton, that no other News of the World journalists were known to be involved in the phone hacking affair, were accurate.
"At no stage did the police arrest or question any member of the News of the World staff besides Mr Goodman," he said.
"Mr Hinton's evidence was based on what was known at the time and was entirely truthful."
The Guardian recently claimed other senior journalists were involved in the phone hacking activity, for which private investigator Glen Mulcaire was also jailed.
News International, the NotW's parent company, was also reported to have paid out a million pounds in civil damages.
The Guardian alleged that "thousands" of public figures - including celebrities and a Royal aide - were targeted with hacking.
Mr Coulson, who was also today appearing before the select committee, has always insisted he was not aware that the phone-hacking was taking place, and only resigned because he bore "ultimate responsibility" for what happened "on his watch".
Tory leader Mr Cameron has given his communications chief strong backing.
Mr Myler said today he had not seen evidence of any payments for illegal activity at the News of the World.
He went on: "I have never worked or been associated with a newspaper that has been so forensically examined, both internally, by outside solicitors, by the police, by the CPS, by the DPP.
"Now if it comes down to this committee and others not being satisfied by those inquiries I really don't know what more I can say."
Appearing before the committee later, Mr Coulson said he had never approved of phone hacking and had no recollection of it being used in his four years as News of the World editor.
"During that time I neither condoned the use of phone-hacking and nor do I have any recollection of instances when phone-hacking took place," he said.
"My instructions to the staff were clear - we did not use subterfuge of any kind unless there was a clear public interest in doing so. They were to work within the PCC code at all times."
Mr Coulson said his staff attended PCC seminars and were given regular refreshers with company lawyers.
He went on: "I gave the reporters freedom as professional journalists to make their own judgments and I also gave them plenty of resources.
"We spent money in pursuit of stories at the News of the World, more money than most newspapers, and I make no secret of the fact."
But he insisted he only ever concentrated on a "handful of stories" that the paper was working on.
"I wasn't able to micro-manage every story and nor did I attempt to," he said.
On the Goodman-Mulcaire case, Mr Coulson said: "I never met, emailed or spoke to Glen Mulcaire."
But he said he knew the name of a consultancy which he later found out was Mulcaire's because his paper paid it £100,000 a year for "legitimate investigation services".
That payment "did not stand out" among the paper's expenditure, he said.
He added that extra payments made to Mulcaire by Goodman were "unknown to me and concealed from the managing editor".
He said he had no knowledge of the paper's recent settlement with Gordon Taylor, the chief executive of the Professional Footballers' Association, whose voicemail was hacked into by Mulcaire.
"Things went badly wrong under my editorship of the News of the World," Mr Coulson said.
"I deeply regret it. I suspect I always will. I take the blame because ultimately it was my responsibility.
"I am not looking for sympathy and I am unlikely to get any today.
"But when I resigned I gave up a 20 year career with News International and in the process everything I worked towards from the age of 18.
"But I think it's right that when people make mistakes, they take responsibility and that is why I resigned."
Mr Coulson described Goodman as a "rogue reporter".
Mr Coulson said he had been informed by the Metropolitan Police that his own phone may have been hacked.
"I received a call from Scotland Yard the Friday before last, from a detective superintendent, to be told there is strong evidence to suggest that my phone was hacked," he said.
"In fact it would appear that there is more evidence my phone was hacked than there is that John Prescott's was."
He added: "I clearly didn't know what Glen Mulcaire was up to."
Mr Coulson said the first he heard of the Gordon Taylor litigation was when he read about it in the Guardian.
"I never asked for a Gordon Taylor story, I never commissioned a Gordon Taylor story, I never read a Gordon Taylor story to the best of my recollection, as you will know we did not publish a Gordon Taylor story.
"Gordon Taylor, with all due respect to him, is not exactly a household name. He may have appeared in the sports pages of the News of the World from time to time; I certainly would not have been interested in a story on him or about him at the front end of the newspaper," he told the committee.
He said the suggestion that phone hacking was being used by journalists had been "in the ether of the newspaper world for some time" but that he himself had not been involved in any way.
Asked if he felt he could have a "proper relationship of trust" with Buckingham Palace should Mr Cameron become prime minister, he said: "There is no problem my end.
"I apologised fully several times, quite properly, to the royal family and to all those who were affected by Clive's actions," he said.
"In relation to this job now, I have done my best to work in as upright and as proper a fashion as I can. Ultimately though, I guess it is for others to judge."
Asked if he agreed with Piers Morgan, the ex-News of the World editor-turned television celebrity, that illegal practices were well known about in the media, he told the MPs: "Ask Piers - he's not backward in coming forward."
Put to him that as a "sainted, celebrated" predecessor Mr Morgan would know what he was talking about, he said, to laughs: "He would certainly like that description."
In bitter exchanges with Tory MP Philip Davies, the newspaper's former managing editor Stuart Kuttner denied his decision to quit shortly before the Guardian's allegations were published was related to the issue.
Mr Kuttner called for the MP to be barred from asking him questions because he had told The Guardian he found the denial "far fetched" which meant he had prejudged today's evidence "in very prejudicial terms".
"In those circumstances I am concerned that Mr Davies is acting as judge and jury and has already made up his mind as to the reliability of anything I say," he said, asking that he be axed from the hearing.
Committee chair, Tory John Whittingdale, rejected his request and told him the committee was "not a court" and Mr Davies said he trusted the public "to make their own conclusion".
Mr Kuttner told him: "I do not think that my resignation is not linked to this matter; I know it is not linked to this matter and moreover there are legal documents in existence ... that make that position perfectly clear."
He said it had never occurred to him that News of the World reporters would try to gain information illegally.
Earlier, Mr Myler confirmed that the News of the World had paid a sum of money to settle an action brought by Mr Taylor.
Tom Crone, the legal adviser at News International, said Mr Taylor had been first to raise the confidentiality clause.
"Every single case against us for breach of privacy results, unless the information is already out in the public domain, in a very strict term of confidentiality at the end of the case," he said.
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