Natalie Rowe, 47, a former madam who supplied prostitutes to a moneyed clientele, has been shown documents by Scotland Yard detectives showing that the hacker obtained details of her mobile phone number and information about at least one of Mr Osborne's circle of close friends, as newspapers investigated claims of drug use at the height of David Cameron's Conservative leadership bid in 2005.
The heavily redacted document raises the possibility that the mobile phone of the Chancellor of the Exchequer, who was managing Mr Cameron's successful campaign to lead the Tory Party, was also targeted by Glenn Mulcaire and raises fresh questions about Mr Osborne's relationship with Andy Coulson.
Mr Coulson was editor of the NOTW when its story about Mr Osborne's friendship with Ms Rowe was published on 16 October 2005, including a strong denial from Mr Osborne that he had taken drugs with Ms Rowe. Two years later, the then Shadow Chancellor played a key role in the decision to recruit Mr Coulson as Mr Cameron's spin doctor following his resignation over the hacking scandal.
Mr Osborne was told by Scotland Yard in July that Mr Mulcaire had obtained his private home phone number but said he wanted police to concentrate on other potential victims of phone hacking. The Chancellor last night declined to answer questions from The Independent about whether he ever discussed with Mr Coulson the story he published about him in October 2005, or whether his personal experience of the editor as a tabloid attack dog played a role in the decision to recommend him for a job in Conservative ranks.
Mark Lewis, the lawyer acting for Ms Rowe who now works as a writer and has completed an autobiography which she says will make incendiary revelations about former clients in the upper echelons of the Conservative Party, is preparing a damages claims against News International after it became clear that she was targeted by Mr Mulcaire at a time when she was co-operating with the NOTW's chief rival, the Sunday Mirror.
She told The Independent: "It is clear the News of the World had no boundaries and they would resort to any measures to ensure they had my story. I have always wondered where they got their information. I thought I had a spy in my camp. Instead, it looks as if I was having my privacy invaded."
The former dominatrix found herself sucked into a louche and privileged world of Oxbridge-educated high fliers including Mr Osborne when she started going out with William Sinclair, one of the Tatton MP's university friends, in 1992. Mr Sinclair, the grandson of Winston Churchill's aristocratic air minister in the Second World War, went on to have a child with Ms Rowe in 1994 and was treated for drug addiction.
During the relationship, Ms Rowe regularly met her boyfriend's social set, including Chris Coleridge, the brother of Nicholas, head of Vogue publisher Conde Nast, and Mr Osborne, who was a freelance journalist and later began his journey to the top of British politics as a researcher in Conservative Central Office. More than a decade later, the former madam was the subject of a tabloid bidding war when she approached PR guru Max Clifford offering to sell her story of wild parties, sex and drug taking involving a wealthy fast set whose members included a fast-emerging star of the Conservative Party.
Mr Clifford initially reached a deal with the NOTW but in July 2005 he fell out with the Sunday tabloid, and Ms Rowe's account of her friendship with Mr Osborne was sold to the Sunday Mirror together with a photograph of the fresh-faced future Chancellor, then 22, with his arm around the sex worker. On the table in front of the pair is a roll of paper and a line of white powder which Ms Rowe, who had in the past taken cocaine but had stopped taking the drug because she was pregnant, insists is cocaine.
Mr Osborne has confirmed knowing Ms Rowe, who ran an agency called Black Beauties, supplying prostitutes to clients paying from £350 per hour, but has always been unequivocal in denying that he took cocaine with her. Describing the allegations as "defamatory and completely untrue", he said at the time: "Twelve years ago a friend of mine went out with a woman called Natalie and they had a child together. I met them together occasionally in the autumn of 1993, and it soon became clear that my friend had started to use drugs. He became more and more addicted and I saw his life fall apart. I tried to persuade him to seek treatment. Eventually he did ... That is, and always has been, the sum total of my connection with this woman."
On 16 October 2005, the Sunday Mirror and the NOTW published simultaneous first edition stories using the photograph. Ms Rowe had always wondered how the NOTW knew when her story was being published, as well as several details she had kept to herself, including the fact she used "naughties" as a codeword for cocaine. The answer, it seems, is that her mobile phone – and those of Mr Osborne's social set – were targeted by Mr Mulcaire at least 10 days before the NOTW article appeared.
The Independent understands the Mulcaire document is an A4 handwritten page which carries the date of 6 October 2005 and is headed with the name of Mr Coleridge. The rest has been blanked out by Weeting officers to protect the privacy of other individuals. There is no suggestion that Mr Coleridge was involved in any wrongdoing.
A spokesman for the Chancellor said last night: "We said at the time that the MPS met with George, that he had been notified that his name and home telephone number appeared on notes kept by Glenn Mulcaire. The MPS said they had no further evidence to suggest George's voicemail had been hacked or attempted to be hacked and there has been no subsequent contact."
Ms Rowe, who says she wants to use her case to shine light on the connections between News International and the Conservative Party, said: "I don't know what, if anything, passed between George Osborne and Andy Coulson after all this. But after the way the News of the World went after him, you would have thought he'd want nothing more to do with them or the editor who published the story."
A News International spokesperson said: "News Corporation's Management and Standards Committeeis co-operating fully with the Metropolitan Police and is facilitating their investigation into illegal voicemail interception and related issues at the News of the World."
The story behind the story
The story which appeared on the front pages of the News of the World and the Sunday Mirror on 16 October 2005 could not have come at a worse time for George Osborne and the then Conservative education spokesman, David Cameron.
The future prime minister, at the time bidding to lead the Tory party, had found himself increasingly dogged by challenges to state whether or not he had used drugs during his university days. The publication of a picture of his Notting Hill Set friend and campaign manager alongside a dominatrix and a claimed line of cocaine helped to further stoke the flames of controversy.
Within a few days, however, the two men had successfully batted away the issue as Conservative heavyweights, including Mr Cameron's leadership rival David Davis, offered their support for the right to remain silent. Commentators later suggested that the story about Mr Osborne, which he described as being part of a "smear campaign" against him, may have helped him by denting his image as an out-of-touch "Tory toff".
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