The News of the World's disgraced royal correspondent Clive Goodman wrote the letter to News International as he appealed against his dismissal in 2007.
In the letter, Goodman said that phone hacking was "widely discussed" during editorial meetings at the News of the World until former editor Andy Coulson banned references to it.
He also claimed that Coulson offered to let him keep his job if he agreed not to implicate the Sunday tabloid when he went to court, and that his own hacking was conducted with "the full knowledge and support" of other senior journalists.
The claims will be particularly embarrassing for the Prime Minister David Cameron, who said that he hired Coulson as his communications chief on the basis that he knew nothing about phone hacking while at the News of the World.
The letter, dated March 2, 2007, was published by the Commons culture, media and sport committee, which also said that it may recall News International chairman James Murdoch to answer more questions over hacking. Various other former News International executives are also expected to be called to give evidence to MPs in September.
Goodman is the only journalist so far to have been convicted of intercepting voicemail messages. He was jailed for four months in January 2007 after pleading guilty to the hacking charges. News International claimed at the time that Goodman had acted alone and none other of its journalists were involved in phone hacking.
Appealing against his dismissal in 2007, Goodman wrote: "The decision is perverse in that the actions leading to this criminal charge were carried out with the full knowledge and support of [redacted]… payment for [jailed private investigator] Glen Mulcaire's services was arranged by [redacted].
"The decision is inconsistent because [redacted] and other members of staff were carrying out the same illegal procedures. This practice was widely discussed in the daily editorial conference, until explicit reference to it was banned by the editor [Andy Coulson]. As far as I am aware, no other member of staff has faced disciplinary action, much less dismissal."
The former News of the World reporter added: "My conviction and imprisonment cannot be the real reason for my dismissal. The legal manager Tom Crone attended virtually every meeting of my legal team and was given full access to the Crown Prosecution Service's evidence files.
"Tom Crone and the editor promised on many occasions that I could come back to a job at the newspaper if I did not implicate the paper or any of its staff in my mitigation plea. I did not, and I expect the paper to honour its promise to me."
The committee also published a second version of the letter, supplied by News International, which was redacted further to remove references to the daily editorial conference, the editor and the offer for Goodman to return to work at the News of the World.
Labour leader Ed Miliband said that today's new phone hacking evidence further demonstrates David Cameron's "catastrophic" judgement in hiring Andy Coulson.
"This evidence raises serious questions about the extent of the cover up at News International and the judgement of David Cameron. It says phone hacking was widely discussed at the News of the World," he said.
"The problem for Cameron is that he was already warned by the article in the New York Times last year about the same behaviour that today's evidence claims went on at the News of the World when Andy Coulson was the editor. Yet he continued to employ Andy Coulson as his director of communications.
"The prime minister took no action and looked the other way amid these allegations that he had brought someone aware of criminal activity into 10 Downing Street. Every new bit of evidence shows how catastrophic his judgement was."