News of the World, the British tabloid paper that sold to millions as “the best for news, showbiz and sport exclusives” is shutting down amid the escalating phone hacking scandal, the head of News International James Murdoch said late on Thursday.

It is widely believed that shutting down the 168-year-old title is an attempt to distance itself from the scandal over voicemail interception by some of its journalists after police said there could be as many as 4,000 victims.

The tabloid will be published for the last time on Sunday it was announced. James Murdoch, who is the son of News Corp chairman Rupert Murdoch, said: “The good things the News of the World does have been sullied by behaviour that was wrong. Indeed, if recent allegations are true, it was inhuman and has no place in our company.”

He added: “The News of the World is in the business of holding others to account. But it failed when it came to itself.”

The news comes as a shock to the industry as many journalists are bound to lose their jobs. Michelle Stanistreet, the general secretary of the National Union of Journalists, said: “The announcement James Murdoch should be making tonight is the dismissal of Rebekah Brooks. It is the people at the top who need to be punished, not ordinary working journalists.”

Many others were cynical about the development. Adrian Sanders, a Lib Dem member of parliament, noted: “The cynic in me suggests that this is a ploy to take the pressure off the BSkyB merger and that when that is out of the way something will rise from the ashes.”