Rebekah Brooks, the former top executive of Rupert Murdoch's British business, was released on bail after being questioned for 12 hours by the London police probing a widening phone hacking and bribery scandal.
Brooks was bailed out in the early hours of the day after being arrested yesterday in connection with allegations of phone hacking and corruption at the now defunct News of the World newspaper of which she was once the editor.
The 43-year-old's arrest suggested the investigation could be closing in on Murdoch's inner circle.
Brooks, who has been close to British Prime Ministers Tony Blair, Gordon Brown and David Cameron, was scheduled to appear before the Culture, Media and Sport Committee of the House of Commons but it now seems unlikely that she will be able to give evidence to the select committee tomorrow, the Daily Mail said.
Her spokesperson said her arrest would make her planned appearance alongside Rupert and James Murdoch at the Commons tomorrow 'pretty tricky'.
However, James is sure to face tough questions tomorrow over allegations he paid 'hush money' to alleged victims of phone hacking.
News International CEO Brooks, regarded by Rupert Murdoch as a 'fifth daughter', resigned from her position on Friday after growing pressure over allegations regarding unethical practices adopted at NOTW like hacking into the phones of politicians, celebrities and dead soldiers and paying bribes to policemen for obtaining crucial information.
It was during Brooks' time as editor of the paper that the phone of murdered teenage girl Milly Dowler was also hacked.
She was arrested by appointment yesterday, and she said she was "very surprised" to learn that she was being arrested.
Her spokesperson David Wilson said she had been bailed until late October.
Many questioned the timing of her arrest that came just two days before her scheduled appearance before a committee.
Mark Lewis, lawyer for the Dowler family, said the timing of the arrest "stinks".
"To be arrested two days before a committee at which she was going to be at one time the only person from News Corp giving evidence looks deliberate," he was quoted as saying by the Daily Mail.
Liberal Democrat MP Adrian Sanders, a member of the committee due to question Brooks and the Murdochs, said: "A lot of people are going to think this is very, very odd. If this is designed to take the spotlight off the police at the same time as giving a shield to Rebekah Brooks, that's a very serious matter indeed".
In dramatic developments, Britain's police chief Paul Stephenson also resigned over his links to a News of the World executive arrested in the case.