The media magnate, who controls four other national titles in the UK, is also raising the price of the Times by 5p to 30p from next Monday in an effort to improve profitability at News International.
The decision to close Today shocked staff at its Wapping headquarters, despite persistent rumours since the summer that its future was in doubt.
The final issue of the title appeared this morning. The company said it would try to transfer as many of the 300 staff as possible to other Murdoch titles, which include the Times, the Sunday Times, the Sun and the News of the World.
Staff said yesterday they expected fewer than 100 employees to remain. "We are in a state of shock here," said one.
"We deeply regret the decision to cease publication," Les Hinton, chief executive of News International, said. "But with a modest circulation, insufficient growth and rapidly rising costs we have no alternative."
Soaring newsprint costs have put all newspaper publishers under increased pressure during the past 18 months.
Richard Stott, the editor, denied rumours that he would not take the vacant editor's chair at the Daily Express. "I want to stay in newspaper journalism," Mr Stott was said to have told his staff.
Analysts said the closure reflected Mr Murdoch's belief that the title could not be turned ar-ound, and that Today's 500,000 readers might move to his other titles. In today's final edition, a four-page pull-out proclaimed the virtues of the Sun. It included an endorsement from the Labour leader, Tony Blair.
An offer for Today from the owner of Harrods, Mohamed al-Fayed, was rebuffed last summer. In an open letter to Mr Murdoch, Mr Fayed wrote last night:"...I negotiated in good faith with you. We had made substantial progress to agreed terms ... It is bad for democracy when a newspaper is killed off. Given the opportunity, I would have made a substantial investment to create a great newspaper in which the whole country could have taken pride. Instead, your Mr Hinton has said today that there was no 'credible' buyer for Today. This is untrue and it is dishonourable of Mr Hinton to say so ..."
But News International insiders said Mr Fayed's offer for the paper was so low it was not credible. A statement in response to the letter said: "We are utterly baffled by Mr Fayed's claims ... His general proposals, such as they were, were not thought to be sufficiently credible to warrant further discussions and were not regarded as a serious option."
The price rise at the Times will mark the end of the circulation price war, launched by Mr Murdoch in mid-1993 in order to build market share, particularly at the expense of the Telegraph and the Mirror Group.
Senior executives at both groups privately welcomed the news, suggesting that it would give all newspapers a chance to improve profitability.
News of Today's closure sparked speculation of a major realignment of the newspaper market. Mr Murdoch was rumoured to have been at the offices of the Daily Mail, and to have launched a bid to take a 25 per cent share of United News and Media, owners of the Daily Express and Sunday Express, as a first step towards buying the titles.
Today's final edition devotes its front page and four pages inside to the news of its own demise. Its leading article states: "Newspapers are a cut-throat, competitive business and the weak will go to the wall, however good the journalism...our greatest campaign of all has been the one to stay alive and it's one that we've finally lost."
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