One of Fleet Street’s most famed and feared operators appears to be ensnared in the ongoing phone-hacking scandal, as Tom Crone, 60, the former head of legal affairs at News International, was arrested in a dawn raid this morning by police officers from Scotland Yard.

“It’s yet another blow to the reputation of News Corp.,” said Chris Bryant, a British M.P. who has been investigating abuses at News International, News Corp.’s beleaguered subsidiary. “I’m glad the police are finally pursuing their investigations wherever the evidence leads them.”

Crone resigned from News International during the height of the phone-hacking crisis last summer, and while he has been censured for misleading Parliament, this is the first time he has been arrested by police. “His arrest is clearly significant,” said M.P. Tom Watson in an interview with The Daily Beast. An “articulate and very clever man,” Watson said, “Crone was a loyal servant to Rupert Murdoch for many years.” The lawyer joined News International 25 years ago, and has been its senior legal figure in many high profile disputes and libel cases.

Watson was one of the leading members of the select committee that began looking at the phone-hacking allegations in 2009. On the first day of the hearings, Crone requested that Watson be dismissed from the committee because of a previous legal dispute with the bestselling Sun newspaper. Watson’s dismissal never came to pass, but Crone’s public demand dominated the media coverage.

Today, the tables have turned dramatically. As well as being one of the most effective lawyers in the British press, Crone’s arrest represents the first sign that the police are looking beyond the editorial level for alleged complicity in the phone-hacking scandal.

Back in 2009, Crone told Parliament that the phone-hacking allegations concerned only one rogue reporter and a private detective. When hundreds more victims came to light last year, Crone was recalled to Parliament. Both he and former News of the World editor Colin Myler (now at The New York Daily News]) claim they informed James Murdoch when the greater extent of phone hacking emerged through civil proceedings. James Murdoch has consistently denied this.

Earlier this year, during his appearance at the Leveson Inquiry into press ethics, Rupert Murdoch conceded there had been a cover-up at News International, and seemed to blame Crone, whom he called a “clever lawyer and drinking pal of the journalists." Crone immediately issued a statement that this was untrue and pointed out that he was attacked for suggesting James Murdoch’s memory was inaccurate. The battle lines were drawn.

According to The Daily Telegraph, the information used to arrest Crone came from News Corp.’s Management and Standards Committee (MSC), a powerful internal legal body created last year under pressure from an American investigation into News Corp.’s potential breaches of the Foreign Corrupt Practices Act, a law that makes U.S. executives liable for the corruption of overseas officials. Until a few weeks ago, the MSC reported to two News Corp. board members, who also happened to be former assistant attorney generals: Viet Dinh and Joel Klein. The latter has since resigned.

The fact that the information came from the MSC could indicate that News Corp. has successfully limited the scandal to its U.K. publishing subsidiary, News International, which is soon to be hived off, as News Corp. splits its entertainment and publishing interests into two new companies. On the other hand, in the highly unusual event that such a senior legal figure winds up facing criminal charges, today’s arrest also opens up the possibility that Crone might provide more evidence against James Murdoch and shed light on his role in the alleged cover-up.