(files to additional subscribers, no change to text)
* Reporter is 10th arrest from Murdoch paper since Jan
* Arrest follows James Murdoch's resignation from UK group
* Police reject Murdoch's group put them under pressure
By Michael Holden
LONDON, March 1 (Reuters) - British detectives investigating claims journalists bribed public officials for information arrested another reporter from Rupert Murdoch's The Sun on Thursday.
Virginia Wheeler, the paper's defence editor, is the 10th member of staff from Britain's biggest-selling daily newspaper to be arrested in the last few weeks over allegations they made illegal payments to police and other public officials.
The arrest is another setback for News International, the British newspaper arm of News Corp, and comes a day after Murdoch's son James stood down as its executive chairman.
"Detectives from Operation Elveden have today arrested a 32-year-old woman by appointment on suspicion of corruption under the Prevention of Corruption Act 1906 and aiding and abetting misconduct in a public office and conspiracy in relation to both offences," London police said in a statement.
News International declined comment, but a source familiar with the situation confirmed that the woman was Wheeler. Police said the woman had been released on bail.
The arrests at the Sun were provoked by information handed to police by the Management and Standards Committee, a clean-up set up by Murdoch to root out any criminality at News International.
The MSC was created in the wake of a phone-hacking scandal at the News of the World Sunday tabloid, which led to the closure of the paper, and the arrest and resignation of senior News International figures.
Murdoch launched a Sunday edition of the Sun last week to replace the News of the World.
On Monday, the detective leading investigations into payments to officials and phone-hacking told a public inquiry that there appeared to be a "culture of illegal payments" at the Sun.
If proven, this could lead to U.S. authorities taking action against News Corp under the Foreign Corrupt Practices Act resulting in possible fines of millions of dollars and criminal charges against individuals.
Critics have long queried why an original police investigation in 2006 led only to the conviction of one News of the World reporter and a private detective when the evidence indicated more people were involved.
It meant News International chiefs could claim hacking was limited to just one "rogue reporter" until last year when, faced with numerous legal claims for damages, the company finally admitted the practice was widespread.
John Yates, who was forced to resign last year as Britain's top counter-terrorism officer over his part in the scandal, was pressed repeatedly at the public inquiry on Thursday over why he had failed to reopen the police investigation in 2009 following newspaper reports that hacking had involved numerous staff.
He admitted his review, which lasted less than a day, was flawed but rejected suggestions his closeness to News International staff had played a part.
"I absolutely know and I guarantee that none of that played any part in my decision-making. My conscience is completely clear on that," Yates said.
He was questioned about social events and meals he had enjoyed with former News of the World deputy editor Neil Wallis, who he said was a personal friend, as well as the paper's crime reporter Lucy Panton.
Both have been arrested by police as part of their inquiries. Yates was asked about an email from Panton's editor asking her to get an exclusive line from Yates for a story as it was "time to call in all those bottles of champagne".
"It's a turn of phrase and no, I haven't been plied with champagne by Lucy Panton," he said.
Peter Clarke, who led the original phone-hacking inquiry, said he did not have the resources to carry out a bigger probe because his officers were dealing with 70 terrorism investigations including a plot to blow up airliners in mid-air.
"Invasions of privacy are odious ... but, to put it bluntly, they don't kill you. Terrorists do," said Clarke, who was the former head of the anti-terrorism branch and led the investigation into the July 2005 suicide bombings in London.
He said companies would usually bend over backwards to assist police but News International had just obstructed them.
"In terms of the investigation it became immediately apparent we weren't going to get any cooperation whatsoever from News International," he said. "This was a closing of the ranks from very early on." (Additional reporting by Kate Holton; editing by Robert Woodward)