The former Conservative minister's final defeat came as he lost his high- profile libel case against Mohamed Al Fayed, the Harrods owner, over cash- for-questions allegations.
At the end of a bitter five-week case, the jury unanimously agreed that Mr Fayed was justified in claiming that Mr Hamilton was a corrupt politician who was prepared to sell his parliamentary services.
Mr Fayed was not present in court for the verdict, but issued a statement within minutes saying: "Christmas has come early. This is total vindication."
The verdict is further embarrassment to William Hague coming in the wake of damaging events involving Jeffrey Archer, Michael Ashcroft, Steven Norris and Shaun Woodward. The case highlighted the claims of sleaze in the Conservative Party which helped bring down John Major's government.
Afterwards, the Conservative Party chairman, Michael Ancram, said in a statement that he hoped "that this is the end of a sad and unpleasant episode which has been damaging to our party". And he added: "I trust that the personalities involved will now retire from the scene."
Legal costs are believed to be in the region of pounds 3.5m, making it the most expensive libel action ever staged. The majority of the costs were borne by Mr Fayed, but costs of around pounds 1m were awarded against Mr Hamilton. He said last night that he was "broke". A fund set up by a group of right- wing sympathisers of the former MP for Tatton had raised pounds 410,000. Looking shattered, Mr Hamilton said he may have to go bankrupt to pay off the rest.
Mr Fayed, who had pleaded justification during a vicious contest, did not have any kind words for his adversary in the libel action who he said should be spending Christmas with another former MP, Jonathan Aitken, who had taken up the "sword of truth and shield of justice" and was now serving a prison sentence for perjury.
Of Mr Hamilton he said: "He knows he is corrupt. People like that should never be in power. He is nothing to me. How can we elect crooks like that?"
His spokesman, Laurie Meyer, said: "Mr Al Fayed regards this verdict as a great victory for honesty in public life. He was vilified for being a Jekyll and Hyde character but the jury saw through it. I think there will be a few bottles of bubbly on ice back at Harrods where Mr Al Fayed will go back to relax. It has been quite an ordeal."
George Carman, Mr Fayed's QC, in a rare public statement by a barrister, said after the verdict: "I am very pleased indeed for Mr Al Fayed. I think this jury has given this case very great and careful consideration and it has confirmed my belief in the value of the jury system."
The decision means that the jurors were satisfied "on the balance of probabilities" that Mr Fayed had established "on highly convincing evidence" that Mr Hamilton was corrupt in his capacity as an MP.
A crucial factor in their decision was a late allegation that Mr Hamilton had corruptly demanded a pounds 10,000 payment from the Mobil oil company for tabling an amendment to the 1989 Finance Bill. Mr Carman said that if it was well-founded, Mr Hamilton's claim "falls and falls completely on Mobil alone because it establishes corruption on the part of a Member of Parliament".
Mr Hamilton had sued over allegations on a January 1997 Channel 4 Dispatches programme that he had corruptly demanded and accepted cash payments, gift vouchers and a free holiday at the Paris Ritz in return for asking parliamentary questions on behalf of Harrods.
Mr Hamilton said: "I do not regret bringing the case, of course, because I could not have gone through life without straining every sinew to do everything that was possible to bring the truth out. Sadly the jury were not convinced."Reuse content