Ex-News International chief executive Rebekah Brooks has been arrested by police investigating phone hacking and bribery at the News of the World.
The 43-year-old was arrested by appointment at a London police station and remains in custody.
She was arrested on suspicion of conspiring to intercept communications and on suspicion of corruption allegations.
She quit News International on Friday as pressure mounted over her role.
Mrs Brooks was editor of the paper between 2000 and 2003, during which time the phone belonging to murdered schoolgirl Milly Dowler was tampered with.
BBC business editor Robert Peston said sources had confirmed it was Mrs Brooks who had been arrested, but Scotland Yard refused to name the woman.
Our correspondent also said News International was not aware that Mrs Brooks would be arrested when her resignation was being discussed at the company on Tuesday and Wednesday of last week. She eventually resigned on Friday.
A spokesman for Mrs Brooks says the Met police notified her on Friday, after her resignation had been agreed, that she would be arrested.
It is the tenth arrest made by Operation Weeting police who are conducting the current investigation into phone hacking.
Officers from Operation Elveden were also involved with the arrest. They are investigating allegations of inappropriate payments to police, an inquiry which is being supervised by the Independent Police Complaints Commission.
Mrs Brooks is due to appear in front of the Commons media select committee on Tuesday to answer MPs questions on the hacking scandal.
Mrs Brooks' spokesman said her arrest would make her appearance at the committee "pretty tricky".
Her former boss News Corp chairman Rupert Murdoch and his son James Murdoch, chairman of News International, are also due to appear.