In a crushing blow for Rupert Murdoch, News Corp has caved into the pressure surrounding its proposal to buy the 61% of BSkyB shares it didn’t own and formally withdrawn its bid.

Only hours before UK MPs were set to show a rare unity and vote to recommend to Murdoch that he drop the £8 billion bid in the light of days of embarrassing revelations surrounding the working practices of Murdoch’s News International newspapers.

News Corp has released a statement announcing that it “no longer intends to make an offer for the entire issued and to be issued share capital of BSkyB not already owned by it.”

As Rapid TV News went press there was no official reaction from Rupert Murdoch himself but Chase Carey, Deputy Chairman, President and Chief Operating Officer, News Corp, commented: "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."

Not surprisingly, News Corp shares have tumbled in the wake of the news.

News Corp’s proposed bid had been bitterly contested by virtually all of its competitors in publishing and broadcasting including Trinity Mirror, the Guardian Media Group, the Telegraph Media Group, Associated News and Media, Slaughter and May and Avaaz who had lobbied the UK government—in particular UK Secretary of State for Culture, Olympics, Media and Sport, Jeremy Hunt—to halt proceedings for fear of handing Murdoch too much power in UK media.

The withdrawal of the bid is a huge embarrassment for the UK government and Hunt especially who less than two weeks ago had all but rubberstamped the deal, stating that a lengthy consultation process had produced no new information to cause UK broadcast regulator Ofcom and the UK office of fair trading (OFT) to spike the deal on the grounds of media plurality concerns.

Indeed, even after days of revelations of alleged malpractices by News International employees, Hunt had not officially declared whether he thought News Corp was a fit and proper owner of BSkyB. The withdrawal now all but saves Hunt, and fellow deal supporter UK Prime Minister David Cameron, from voting against or abstaining on a course of action that they had actually initiated. By contrast, the withdrawal can be seen as a clear victory for UK Opposition leader Ed Miliband who had been forthright in his opposition to News Corp landing the cash generating machine that is BSkyB.

In June 2011 Enders Analysis forecast that BSkyB’s earnings before interest and tax would rise from £845 million in 2010 to £1.7 billion in 2015, on the back of sales soaring from £5.7 billion to £8.1 billion. This would mean that BSkyB would have exceeded the combined revenues of the BBC, ITV, Channel 4 and Channel 5.