Public relations expert Max Clifford has described the phone-hacking scandal as a "cancer" within journalism.

He told the Leveson Inquiry it involved a "tiny minority" and some journalists had been forced to take part.

Mr Clifford said a "public backlash" followed revelations about Milly Dowler's phone being hacked.

Daily Mail editor Paul Dacre, giving evidence for a second time, again denied phone hacking was the source of a story about actor Hugh Grant.

Earlier Heather Mills denied authorising former Daily Mirror editor Piers Morgan or anyone else to access her voicemail messages.

Mr Clifford said he was aware of several stories in the last few months which tabloid editors had chosen not to publish and he said he was convinced this was because they were "frightened" of the Leveson Inquiry.

Mr Clifford also confirmed the details of a £1m settlement he reached with former News International boss, Rebekah Brooks, after he discovered the News of the World (NoW) hacked his phone.

He said he became aware of mobile phone hacking in early 2000.

Mr Clifford said: "It involved a tiny minority and some of them were forced. If you don't you're out, you're sacked, you're finished. It was a cancer which is now hopefully being cut out."

'Shockwaves'

He said: "What really got the British public angry was Milly Dowler and the McCanns. They didn't care about the stars, or me, having their phones hacked. Most people didn't care. But when they read about Milly Dowler and the McCanns they were shocked and horrified and that had an effect."

Mr Clifford said it had sent "shockwaves" through Fleet Street and many editors had decided not to print certain salacious stories in recent months because of the Leveson Inquiry.

He said he had been aware for years that journalists were listening in on calls, and said it dated back to the heyday of Muhammad Ali and Marlon Brando.

Mr Clifford said the freedom of the press was vitally important and he said the UK did not want to end up like China or Russia where journalists were "slaves to the system".

But he said there needed to be a proper independent press watchdog which could stop papers publishing stories which were wrong and damaging, especially when they were about "ordinary people".

He was asked about the infamous "Freddie Starr Ate My Hamster" story in the Sun in 1986.

Mr Clifford said the Sun's then editor Kelvin McKenzie had rung him to say they had a story from someone claiming the comedian had eaten his hamster.

He said Mr Starr had denied it but Mr Clifford gave the Sun "the green light" to publish the story because Mr Starr was on the eve of a UK tour and he thought it would be good for publicity.

But Mr Clifford said he had also stopped "hundreds of sex scandals" about his clients.

The public relations consultant was followed by the Daily Mail editor who gave evidence for the second time in a week, who appeared combative under robust questioning regarding the source of a story about the actor Hugh Grant.

"Our group did not hack phones and I rather resent your continuing insinuations that we did," he told David Sherborne, counsel for the phone-hacking victims.

Mr Dacre also discussed his description of actor Hugh Grant's allegations about phone hacking at the Mail as "mendacious smears driven by his hatred of the media

The newspaper editor said Mr Grant's comments alleging hacking at the Mail were "toxic" and "explosive" and "he knew the damage it would cause".

He said it was untrue and false that, as the actor told the House of Lords, private investigator Glenn Muclaire spent 30% of his time working for Associated Newspapers.

Mr Dacre said he checked company records and it was clear that his newspaper group had not paid Mulcaire.

Earlier, the inquiry heard from Sir Paul McCartney's ex-wife Heather Mills, who described an incident in 2001 after she returned from a holiday in India.

She said after a row with Sir Paul he left her 25 voicemail messages, including a "ditty", begging forgiveness.

Ms Mills said another journalist later told her he knew there had been problems and mentioned the song.

Mr Morgan, now a chat show host, has previously told the inquiry he listened to a voicemail message left for Mills by Sir Paul, but refused to say when or where because he wanted to protect a "source".

Ms Mills, whose statement has now been posted online, said she had never authorised Mr Morgan or anybody else to access or listen to her voicemails.

"I couldn't quite believe that he would even try to insinuate, a man that has written nothing but awful things about me for years, would relish in telling the court if I had played a voicemail message to him," she said.

'Lies and abuse'

She criticised the "postage stamp-sized apologies" which newspapers were forced to make following inaccurate stories about her.

Ms Mills said: "My personal view is that until there is a disincentive to write lies and abusive comments it's going to continue.

"If you know you are going to be embarrassed by front page apologies every week I think you'd stop."

Earlier, former News of the World (NoW) news editor Ian Edmondson agreed with Robert Jay QC, counsel to the inquiry, that there was a "culture of bullying" at the NoW.

When asked if ex-NoW editor Colin Myler was part of that culture, Mr Edmondson agreed he was, but said as he was awaiting an employment tribunal against News International he did not wish to go into detail.

He was also asked about reporter Neville Thurlbeck's attempts to contact two women who were involved in the attempt to expose Formula 1 boss Max Mosley over his involvement in a sado-masochistic sex session.

Mr Edmondson, whose statement to the inquiry has now been published on the Leveson Inquiry website, said that on reflection they read like "threats".

Mr Thurlbeck, who had told the inquiry Mr Edmondson made him draft the email, later tweeted: "I stand by my statement to Leveson. And my memo to Myler last Feb on the matter and which he accepted without contradiction."