James Murdoch has rejected allegations that he is a "mafia boss" and has told a British parliamentary committee he had not misled it about the extent of his knowledge of phone-hacking at the News of the World.

At today's appearance, MPs led by anti-hacking campaigner and opposition Labour politician Tom Watson grilled James Murdoch about a meeting he had with former editor Colin Myler and legal executive Tom Crone.

"Mr Murdoch, you must be the first mafia boss in history who did not know he was running a criminal enterprise," said Mr Watson.

"Mr Watson, please," said Mr Murdoch, apparently taken aback.

Mr Murdoch turned on his former News of the World colleagues as he fought to survive a second round of questioning and keep his place in his father's media empire.

Mr Murdoch blamed Mr Myler, the last editor of the now-defunct Sunday tabloid, for giving him incomplete information, and accused the newspaper's ex-legal chief, Mr Crone, of misleading the committee of MPs investigating the hacking.

"This was the job of the new editor who had come in... to clean things up, to make me aware of those things," said Mr Murdoch, appearing confident under interrogation by MPs.

He also said Mr Crone had ordered the surveillance of public figures by the News of the World - revelations of which have further damaged the company this week.

The News Corp-owned News of the World was revealed this year to have run an industrial-scale operation to hack into the phones of murder victims including schoolgirl Milly Dowler as well as celebrities and politicians.

Previously, News Corp had maintained the hacking was the work of a lone, "rogue" royal reporter, Clive Goodman, and private detective Glenn Mulcaire. Both went to jail for the offence in 2007.

In 2008, James Murdoch approved a payoff of about £750,000 to hacking victim and soccer boss Gordon Taylor, who had in his possession an email of hacking transcripts appearing to show the hacking went beyond Goodman.

He reiterated to MPs today that he had approved the unusually large payoff only because he was following legal advice, and not because he knew the so-called "for Neville" email could implicate other journalists.

"I was given sufficient information and only sufficient information to authorise the increase of the settlement offered, that Mr Crone and Mr Myler had already eagerly been increasing in order to achieve a settlement even before it had come across my desk," he said.

Mr Murdoch reiterated that Mr Myler and Mr Crone had not shown him the "for Neville" email. He denied that he had misled parliament in his previous testimony.

Mr Watson asked Mr Murdoch: "Do you think Mr Crone misled us?" Murdoch answered: "It follows that I do, yes."

Mr Murdoch adopted a more contrite tone than on his previous appearance before the committee together with his father Rupert in July.

"It is a matter of great regret that things went wrong at the News of the World in 2006. The company didn't come to grips with those issues fast enough," he said.

James Murdoch was brought into News International after the date of the last known phone-hacking, but has been accused of failing to ask the right questions at least, and possibly of participating in a huge corporate cover-up.

He is currently deputy chief operating officer of News Corp with responsibility for all its non-US business, and was until recently expected to take over sooner or later from his father, Chief Executive Rupert Murdoch.

He is also still chairman of News International, News Corp's British newspaper arm.

An admission by News International this week that the News of the World ordered the surveillance of lawyers representing hacking victims and others as recently as this year have added to the impression that the culture may not have changed much.

Mr Murdoch said the members of the committee of MPs had also been surveillance targets of the newspaper, and apologised "unreservedly" to Mr Watson, one of the targets.