Sister of James Murdoch said he should go

Rupert Murdoch was advised by his daughter Elisabeth that her brother James should stand down from his senior role at News Corp earlier this year because of the mishandling of the phone-hacking scandal, the magazine Vanity Fair claims.

Both Elisabeth and Murdoch senior separately suggested to James that he should "take a leave" from the company this summer, only for Rupert Murdoch to "change his mind" following a "sleepless night", the magazine claims in an article published tomorrow.

The story is based on information supplied by News Corp insiders and sources close to the Murdoch family.

It states that Elisabeth Murdoch declined to take her seat on the News Corp board because her lawyers and her husband, the PR man Matthew Freud, advised her that "it was best not to take the seat, in order to stay as far away from the [phone-hacking] scandal as possible".

Vanity Fair suggests an eventual scenario in which eldest son Lachlan could become chairman, with James as chief executive, and their sisters Elisabeth and Prudence stand to one side. But then, it admits, Rupert could continue as chairman and chief executive for a further decade or more.