News Corp has announced it is withdrawing its bid to take full control of BSkyB following days of pressure over the phone hacking scandal.

Chase Carey, deputy chairman, president and chief operating officer, News Corporation, said in a statement: “We believed that the proposed acquisition of BSkyB by News Corporation would benefit both companies but it has become clear that it is too difficult to progress in this climate. News Corporation remains a committed long-term shareholder in BSkyB. We are proud of the success it has achieved and our contribution to it.”

In a statement, BSkyB said its board believed there to be a compelling investment case and significant growth opportunities, as demonstrated by its excellent operational and financial performance and strong balance sheet which provides both strategic and financial flexibility.

Commenting on the announcement, Jeremy Darroch, BSkyB’s chief executive, said: ”We are delivering on our clear, consistent strategy and are building a larger, more profitable business for the long term. We remain very confident in the broadly based growth opportunity for BSkyB as we continue to add new customers, sell more products, develop our leading position in content and innovation, and expand the contribution from our other businesses. I would like to commend all our employees for their unrelenting focus throughout the offer period and thank them for their continuing support.”

Nicholas Ferguson, BSkyB’s deputy chairman and senior independent non-executive director, added: ”Since the start of the offer period, BSkyB’s management team has remained fully focused on its strategic and operational priorities, as evidenced in the strong results reported for the first nine months of the financial year. With good momentum and a range of options for continued growth, BSkyB is well positioned to increase earnings and cash flow and deliver higher returns for shareholders.”

Downing Street said it welcomed the move, adding that News Corp should now concentrate on cleaning up the problems with its business.

It was expected that the governing Conservative and Liberal Democratic parties would vote together in the House of Commons on a motion brought by the opposition Labour party that called for News Corp to drop its bid while the investigations into alleged phone hacking at the News of the World continue.

On Monday culture secretary Jeremy Hunt announced that he would, after all, refer the bid to the Competition Commission. It followed the withdrawal by News Corp of undertakings that had included the proposed spin-off of Sky News as a separate company. Only a week ago it had been expected that Mr Hunt would approve the deal without further reference.

News Corp also has around 45% in Sky Deutschland and owns Sky Italia outright. However, European regulators saw no issue, while the British authorities focussed on issues of media plurality given News International’s ownership, until recently, of four national newspapers.

The bid for the 61% in BSkyB that News Corp did not already own was originally tabled in June 2010 at a price of 600 pence (842 euro cents) per share. From a 52-week high of 850p in the weeks following the bid, the BSkyB share price has subsequently fallen to today’s 670p.

The withdrawal by News Corp of its bid comes at the end of a tumultuous 10 days for the company and its UK interests. Its subsidiary News International continues to be at the centre of a scandal over the interception of telephone messages of politicians, celebrities, and crucially, families involved in a number of high-profile cases including that of murdered teenager Milly Dowler.

Prime minister David Cameron today announced a wide ranging inquiry into the phonehacking scandal to be headed by Lord Justice Leveson.