By Kate Holton and Estelle Shirbon
LONDON, May 11 (Reuters) - David Cameron signed off messages to tabloid editor Rebekah Brooks with an affectionate "LOL", she told an inquiry on Friday, conjuring the embarrassing image of a British prime minister-in-waiting fawning over a Rupert Murdoch protegee.
As editor of Britain's most-read newspapers the News of the World and later the Sun, Brooks had the power to make or break careers and was courted for years by top politicians until she quit in disgrace in July 2011 over phone-hacking by reporters.
Her testimony at the Leveson Inquiry into press standards revealed how she lobbied finance minister George Osborne and other ministers for the approval of a major Murdoch takeover bid - a key issue in a long-running controversy over whether the Murdoch press had undue influence on policy.
Adding fuel to that debate, an email she handed over as evidence showed that media minister Jeremy Hunt asked Murdoch's News Corp how the government should position itself on phone-hacking. At the time, Hunt was in charge of deciding whether to approve News Corp's bid for lucrative pay-TV group BSkyB.
Brooks also provided colourful details of her friendships with the cream of British politics, from private dinners with former Labour Prime Minister Tony Blair to Christmas parties with Conservative David Cameron, the current prime minister.
Brooks said she used to exchange frequent text messages with Cameron, including during the 2010 election campaign when the Conservative leader was still in opposition.
"Occasionally he would sign them off LOL, lots of love. Actually, until I told him it meant 'Laugh Out Loud', and then he didn't sign them like that anymore," she said, blushing to the roots of her signature bright red curls.
A celebrity in her own right who was previously married to an actor from a popular TV series, Brooks wore a demure black dress with a white collar for her long-awaited televised appearance. It was being avidly followed in Britain, where "LOLgate" was a top trend on Twitter just after she spoke.
Murdoch shut down the News of the World last July when it emerged its journalists had hacked into the voicemails of public figures and a murdered schoolgirl. In the wake of the revelations, Brooks resigned as CEO of Murdoch's British newspaper group and is now under police investigation.
Until she quit, Brooks had close contacts with politicians even though the hacking scandal was gathering steam. Cameron, Osborne and Blair were among those who indirectly conveyed their sympathy to her at the height of the scandal in July 2011.
Brooks said Cameron had apologised for not standing up for her, explaining he was under too much pressure from Labour.
The impression that Cameron and Osborne surrounded themselves with a coterie of wealthy individuals for cosy dinners or horse riding in the countryside has been a public relations disaster for both men, who come from privileged families and are often portrayed as out of touch with society.
Brooks was for years at the heart of the "Chipping Norton set", a circle of friends including Cameron and Murdoch's daughter Elisabeth who socialised at the weekend at their country mansions around the picturesque Oxfordshire town.
After some playful exchanges at the start of Brooks' testimony, lawyer Robert Jay's questioning turned more serious and the atmosphere more tense as Jay tried to pin her down on the specifics of her influence over politicians and policy.
"I don't know a politician that would turn down a meeting with a senior journalist from any broadcaster or any newspaper," she said, seeking to play down her own personal power.
These questions will be raised time and again in coming weeks as Cameron, Blair and former Labour Prime Minister Gordon Brown take their turn at the Leveson witness stand.
The appearance last month at the inquiry of James Murdoch, son of Rupert, revealed how a senior ministerial aide had inappropriately sought to help Murdoch's News Corp secure the $12 billion takeover of lucrative BSkyB.
The aide quit but his boss, minister Jeremy Hunt, is also facing calls to stand down. He will be under further pressure in light of the email which revealed his request for News Corp's advice.
In a written statement to Leveson, Brooks said she had "forcefully" expressed her support for the BSkyB bid to Cameron, Osborne and other government members. She said Cameron had told her, however, that the decision on allowing it was a quasi-judicial affair and was not his to make.
Jay also tackled Brooks over some of her most controversial stories when she was an editor, including a decision to "name and shame" convicted child sex offenders that resulted in a mob attacking a paediatrician mistaken for a paedophile.
The most confrontational moment of Brooks' testimony came when Jay pressed her on her decision to splash the news that Brown's four-month-old baby had been diagnosed with cystic fibrosis. Brooks, describing herself as a close friend of Brown's wife Sarah, said she would not have published the story if the Browns had asked her not to.
She later hit back at Jay, accusing him of focusing his questioning on trivial matters and suggested this was driven by her gender.
"We're not in a tabloid newsroom now, we're at an inquiry," she chided him.
"Did Rupert Murdoch and I swim? ... Did Mr Murdoch buy me a suit? The list is endless ... I think a lot of it is gender-based. If I was a grumpy old man of Fleet Street no one would write a word about it," she said, looking increasingly annoyed.
Dubbed by some the "fifth daughter" of Rupert Murdoch, Brooks edited the News of the World from 2000 to 2003 and went on to edit the Sun daily tabloid, Britain's most widely read newspaper, for six years. She was the Sun's first woman editor.
Her second marriage, to horse-trainer and Cameron school friend Charlie Brooks, was attended by Murdoch, Cameron and Brown. Shortly afterwards Murdoch promoted her again, this time to CEO of News International, his British newspaper group. She was in that post from 2009 to 2011.
As the phone hacking scandal spiralled out of control last July, Rupert Murdoch flew into London to take charge of the crisis, putting his arm around Brooks in the street outside his house and telling reporters that she was his top priority.
Routinely described in the media as a tough operator who struck fear into politicians' hearts, Brooks is praised by colleagues as a phenomenal networker who can charm and beguile everyone from prime ministers to police.