James Murdoch stepped down today as executive chairman of News International, News Corp's scandal-plagued British newspaper unit.
James Murdoch, 39, will remain News Corp's deputy chief operating officer and focus on international television operations, the New York-based media and entertainment giant said in a statement.
News International has been embroiled in a phone-hacking scandal which has seen the arrests of several former top editors and the abrupt closure last year of the News of the World.
A UK public inquiry into press standards heard from a top police officer on Monday that journalists at another News International paper, The Sun, had made cash payments to a "network of corrupted officials."
James Murdoch has long been seen as the heir apparent to his father Rupert Murdoch but the elder Murdoch was accompanied by another son, Lachlan, on a recent visit to The Sun, during which plans were announced to launch a Sunday edition of the tabloid.
News Corp said James Murdoch was stepping down from News International following his relocation to company headquarters in New York as deputy chief operating officer, a move which took place last year.
"Now that he has moved to New York, James will continue to assume a variety of essential corporate leadership mandates, with particular focus on important pay-TV businesses and broader international operations," Rupert Murdoch, the chairman and chief executive of News Corp, said.
"We are all grateful for James' leadership at News International and across Europe and Asia, where he has made lasting contributions to the group's strategy in paid digital content and its efforts to improve and enhance governance programs," Rupert Murdoch said.
"He has demonstrated leadership and continues to create great value at Star TV, Sky Deutschland, Sky Italia, and BSkyB'', he added.
James Murdoch said that with the "successful launch of The Sun on Sunday and new business practices in place across all titles, News International is now in a strong position to build on its successes in the future''.
"As deputy chief operating officer, I look forward to expanding my commitment to News Corporation's international television businesses and other key initiatives across the company," he said.
Tom Mockridge will remain as chief executive of News International and will report to News Corp president and chief operating officer Chase Carey, the company said.
News Corp has settled dozens of claims brought by victims of phone-hacking by the News of the World, including a £600,000 sterling deal with singer Charlotte Church agreed on Monday.
The 168-year-old News of the World was shut down in July after it emerged it had hacked into the voicemails of Milly Dowler, a missing British schoolgirl who was later found murdered.