Sun rises on Sunday as Murdoch placates his troops

RUPERT Murdoch has again changed the face of British media after he flew to London to appease enraged staff - who were in open rebellion against his empire - and announced that far from closing their newspaper, he would give them another.

The media baron told News International staff at Wapping in East London that he would replace the News of The World, which he closed with the loss of hundreds of jobs last year in the face of public and political fury over phone hacking, with a new masthead, The Sunday Sun.

Staff across his English mastheads have been engaged in a civil war against Mr Murdoch and his executives since 10 Sun journalists and former journalists were arrested in raids based on information of alleged corruption given to police by an internal management committee.

The decision on the new newspaper had been discussed and staff are believed to have been secretly working on a design and launch plan for some time. But no announcement was expected until damaging investigations into the media empire had been concluded.

However, Mr Murdoch needed to calm staff who had been threatening to take legal action in the European Court of Human Rights.

Journalists have demanded that the company's staff and management committee - which reports direct to News Corporation in New York - stop handing information on them and their confidential sources to police.

A police officer and an army major and his wife are among those arrested and bailed by police in the investigation into alleged payments by staff at The Sun to public officials for information. Such payments are illegal in Britain.

While Mr Murdoch appeased staff with the new newspaper announcement and his decision to allow those who had been arrested to return to work until any charges are laid, and offered to pay their legal expenses, his business still faces dangers in Britain and the US.

Mr Murdoch said that News Corp ''will obey the law'' and that ''illegal activities simply cannot and will not be tolerated - at any of our publications''.

Mr Murdoch also told staff he would remain in London to help in the current crisis.

Andrew Neil, former Sunday Times editor, said in The Guardian that Mr Murdoch's move was in essence a holding operation and that his long-term chances of appeasing both Sun journalists and the big News Corporation shareholders in the US were slim.