Murdoch, the executive chairman of News International, admitted earlier in the week that he did receive a vital email in 2008, but claimed that he did not read the documents that suggested hacking was "rife" at the News of the World.
The Hollywood Reporter said yesterday that senior sources close to News International claim that Murdoch believes former News of the World editor Colin Myler and the paper's legal chief Tom Crone have withheld key evidence from him before he signed off a major hacking settlement to Gordon Taylor in 2008.
The controversy stems over News International's repeated claim that hacking was just down to one "rogue reporter", the ex royal editor Clive Goodman who was jailed in 2007 alongside private investigator Glenn Mulcaire.
However, the revealed emails showed that Gordon Taylor, the chief executive of the footballers' union, wanted to "demonstrate what happened to him was rife throughout the organisation".
There is also confusion over whether Murdoch was shown "four core documents that really point to widespread wrongdoing" at News international - the documents including the so-called 'for Neville' email featuring a transcript of messages taken from Taylor's phone; a memo from Goodman alleging that hacking was approved by bosses at News International; a legal opinion from Michael Silverleaf QC identifying a "culture" of criminality at the News of the World; and a further memo from Crone detailing further evidence of illegal behaviour.
The source said that these key documents should have been shown to James Murdoch, but weren't.
"There are a number of documents he was not given…if people had wanted to be as open as possible and to go into the detail of the case, then you would have expected those documents to be given to him," the source said.
Back in July 2009, Myler told the House of Commons culture, media and sport select committee: "Myself and Mr Crone... went to see James Murdoch [in 2008] and told him where we were with the situation... James Murdoch was advised of the situation."
However, Murdoch has always pleaded his ignorance, telling the MPs in July this year: "The company paid out-of-court settlements approved by me. I now know that I did not have a complete picture when I did so."
Myler and Crone openly contradicted the statement, telling the committee that his "recollection of what he was told when agreeing to settle the Gordon Taylor litigation was mistaken". Murdoch then responded by accusing them of giving "misleading" evidence.
Emails were published by parliament on Monday showing that Myler had sent internal documents to Murdoch in 2008 that should have sounded a clear warning bell over the scale of hacking at the News of the World.
But Murdoch merely responded in a letter: "It now appears that Mr Myler sent an email to me on Saturday afternoon, June 7 2008, in order to request a short meeting the following Tuesday (June 10) for an update on the Gordon Taylor case.
"Given the timing of my response, just over two minutes after Mr Myler sent his email to me, and the fact that I typically received emails on my BlackBerry on weekends, I am confident that I did not review the full email chain either then, or afterwards."
> News of the World accused of withholding evidence in hacking probe