As allegations mounted this week that its journalists had hacked into the voice-mails of thousands of people, from child murder victims to the families of Britain’s war dead, the tabloid had hemorrhaged advertising and alienated millions of readers. 

Yet no one, least of all the 168-year-old paper’s staff, was prepared for the drama of a single sentence that will surely go down as one of the most startling turns in the 80-year-old Australian-born press baron’s long and controversial career.

“News International today announces that this Sunday, 10 July 2011, will be the last issue of the News of the World,” read the preamble to a statement from Murdoch’s son James, who heads the British newspaper arm of News Corp.

Hailing a fine muck-raking tradition at the paper, which his father bought in 1969, James Murdoch told its staff that the latest explosion of a long-running scandal over phone hacking by journalists had made the future of the title untenable: “The good things the News of the World does ...  have been sullied by behavior that was wrong. Indeed, if recent allegations are true, it was inhuman and has no place in our Company. The News of the World is in the business of holding others to account. But it failed when it came to itself.

Steven Barnett, professor of communications at Westminster University, said he was “gobsmacked” “Talk about a nuclear option,” he told Reuters.  “It will certainly take some of the heat off immediate allegations about journalistic behavior and phone hacking.”

Tom Watson, a member of Parliament from the opposition Labour party who had campaigned for a reckoning from the paper over the phone hacking scandal, said: “This is a victory for decent people up and down the land. I say good riddance to the News of the World.”

There was no immediate response from members of Prime Minister David Cameron’s Conservative-led government, which has found itself embarrassed by the avalanche of allegations this week after it gave its blessing in principle to News Corp’s takeover bid for broadcaster BSkyB. It was unclear whether the company would produce a replacement title for the lucrative Sunday market, in which, despite difficult times for newspaper circulations, the News of the World is still selling 2.6 million copies a week.

News of the World journalists were stunned. Anger may be directed at top News International executive and Murdoch confidante Rebekah Brooks, who edited the paper a decade ago during the period of some of the gravest new allegations. 

So far, Murdoch has said he will stand by Brooks, 43, who edited the paper from 2000 to 2003, when some of the gravest cases of phone hacking are alleged to have taken place. She is a also a regular guest of the prime minister, and enjoys good relations with previous Labour leaders in power until last year.