The Prime Minister today (June14) told the Leveson Inquiry into media ethics that the decision to appoint the former News of the World editor as Tory party director of communications has "come back to haunt him and me".
Coulson was hired to Cameron's team while the Tories were in opposition in 2007, and he followed to Downing Street as director of communications after the 2010 general election.
However, he quit the post in January 2011, saying that his job had become "impossible to do" due to the string of hacking revelations about the News of the World.
The Prime Minister was today quizzed on his decision to employ Coulson after the latter man had resigned from the News of the World.
But he explained that, before making the decision to hire him, he had been given "assurances" from Coulson that he had no knowledge of phone hacking.
"I sought assurances, I got them and that was the basis on which I employed him," the PM said.
In his witness statement, Cameron added: "He denied any knowledge of the hacking but said he took responsibility for what had happened on his watch. I asked him specifically about his involvement.
"My question was always whether any new evidence had been disclosed to suggest any knowledge of hacking. If such evidence had been revealed I would not have employed him."
The Prime Minister said that he was "satisfied" that it was right to hire Andy Coulson, and it was his decision alone. He also denied seeking a "reference" from Rebekah Brooks, the former chief executive of News International.
He was also asked about the comparison to Alastair Campbell, the former Daily Mirror journalist who was the "spin doctor" to Tony Blair's Labour government.
Cameron said that Coulson was "less political" than Campbell.
Earlier, he said that he saw Coulson as the type of "big hitter" who could deal with "pressure" in day-to-day government, and also "materially change how we do things".
Coulson was arrested last year by officers from the Metropolitan Police investigation into phone hacking. He has so far not been charged with any offence.
Separately, he is fighting charges of perjury in Scotland over the trial of Tommy Sheridan, the Scottish politician who was sent to jail for three years in 2007 for lying under oath in his £200,000 defamation case against the News of the World a year earlier.