Met chief has questions to answer, says No 10

Sir Paul Stephenson was put under renewed pressure yesterday over Scotland Yard's decision to hire the former News of the World deputy editor Neil Wallis – arrested this week on suspicion of phone hacking – when the matter was referred to the public inquiry and Downing Street made it clear that the embattled head of the Metropolitan Police had "urgent questions to answer".

The Yard disclosed that it had paid Wallis £1,000 a day as a public relations consultant, on the same day that the former News International executive was arrested by officers investigating the phone hacking scandal.

Boris Johnson, Mayor of London, who held an emergency meeting with Sir Paul on Thursday, wrote to Mr Justice Brian Leveson, who will oversee the public inquiry into journalistic practices, to warn that the contract awarded to Wallis meant that "serious questions have been raised about the relations between the press and the police".

The Home Secretary, Theresa May, was said to be "as surprised as everyone else" by news of the arrangement.