LONDON - The British prime minister's communications chief resigned Friday following intense pressure over claims that he encouraged reporters to illegally spy on politicians, celebrities and royalty while he was editor of a powerful tabloid newspaper.

Former News of the World newspaper editor and Prime Minister David Cameron's director of communications, Andy Coulson, is seen leaving his home in Dulwich, southeast London in this September 8, 2010 file photograph. Coulson resigned as Cameron's director of Communications, Downing Street said, on January 21, 2011. [Photo/Agencies]

The resignation is a blow to Prime Minister David Cameron, who has resisted calls to fire Andy Coulson despite the building scandal. It also further calls into doubt claims by the Rupert Murdoch-owned News of The World that phone hacking was only carried out by a couple of rogue employees.

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Coulson denies wrongdoing, but said "continued coverage of events connected to my old job at the News of the World has made it difficult for me to give the 110 percent needed in this role."

David Cameron said that he was "very sorry that Andy Coulson has decided to resign as my director of communications."

"Andy has told me that the focus on him was impeding his ability to do his job and was starting to prove a distraction for the government," Cameron said in a statement, which made no direct mention of the hacking claims.

A reporter and a private investigator working for the News of the World were caught illegally eavesdropping on the phones of the British royal family's entourage in 2007. Coulson resigned when the pair were convicted, but says he knew nothing of the hacking.

Many are skeptical of that claim, but a police inquiry, which turned up thousands of numbers of potential phone tapping targets, ended in only two convictions - royal reporter Clive Goodman and private investigator Glenn Mulcaire, both of whom spent several months in prison.

Police and prosecutors, stung by allegations that they were too easy on the paper, have recently reopened the investigation.

Last year, former News of The World reporters were quoted by The New York Times and The Guardian newspapers as implicating Coulson in the phone hacking, which worked by tapping into targets' cell phones and eavesdropping on their voicemail messages.

Legal pressure on the paper has also been building, with lawyers for actress Sienna Miller filing court papers accusing the News of The World of illegal hacking and harassment, leading to the suspension of Ian Edmondson, a senior editor at the paper.

Other high profile Britons are either suing the paper for allegedly spying on them or have already accepted out of court settlements.

The News of The World declined to comment on Coulson's resignation, but critics said it should have happened long ago.

"To say this is long overdue is an understatement," said opposition lawmaker Chris Bryant - one of those who claims to have been targeted by the hacking.