Ex-News International chief executive Rebekah Brooks has been arrested by police investigating phone hacking and bribery at the News of the World.
The 43-year-old was arrested by appointment at a London police station and remains in custody.
She was arrested on suspicion of conspiring to intercept communications and on suspicion of corruption.
She quit News International on Friday as pressure mounted over her role in the deepening scandal.
Mrs Brooks was editor of the paper between 2000 and 2003, during which time the phone belonging to murdered schoolgirl Milly Dowler was tampered with.
BBC Business Editor Robert Peston said News International was not aware that Mrs Brooks would be arrested when her resignation was being discussed at the company on Tuesday and Wednesday of last week. She eventually resigned on Friday.
Mr Peston added: “It’s certainly the most extraordinary development. Rebekah Brooks is incredibly close to the most powerful people in the UK – the current prime minister, the previous prime ministers Tony Blair and Gordon Brown. More or less every senior person of influence within Britain.”
He said it could now potentially jeopardise her appearance at the Culture, Media and Sport Select Committee on Tuesday, where she is due to answer MPs questions on the hacking scandal.
“I would assume having been arrested it’s now almost impossible for her to appear. It’s very difficult for MPs to ask her questions that wouldn’t be seen to be impinging on the police investigation,” Peston said.