Kelvin MacKenzie gave evidence to the Leveson inquiry on behalf of the Sun, which he edited between 1981 and 1994Copyright: Georgie Gillard/PA
Turning on News International, his employer for many years as an editor and columnist on the Sun, Mackenzie told the Leveson inquiry that the publisher's alleged lies to the PCC over phone hacking were "quite wrong" and it should "pay a commercial penalty".
"The threat of a financial penalty would have a straightforward effect on newspapers," he said.
"No managing editor, no proprietor, would dream of lying under those circumstances," MacKenzie said.
In July last year, then-PCC chairman Baroness Peta Buscombe told the BBC that the regulatory body had been misled by News International, publisher of the now-defunct News of the World, over phone hacking.
The PCC concluded in a 2009 report that there was no evidence to suggest phone hacking went beyond one rogue reporter.
She told the BBC: "I am the regulator but there is only so much we can do when people are lying to us.
"We know now that I was not being given the truth by the News of the World. Who knows if there are other newspapers that have lied?"
MacKenzie, who was editor of the Sun from 1981 to 1994, told the inquiry today that the culture at the tabloid had changed since he stepped down as editor.
The Sun had, under the editorship of Rebekah Brooks and later Dominic Mohan, become "much more cautious" in its approach, he said.
"Whether that is right is not for me to say, but there is a definite sense of caution."
The former editor admitted that during his time at the newspaper there had been "no regard" for issues such as privacy, and stood by a statement made during his appearance at one of the Leveson inquiry seminars in October last year, with regard to checking stories: "If it sounded right, it was probably right, and therefore we should lob it in''.
He also denied any knowledge of his staff paying police officers for information, but added that it "wouldn't surprise me if they were".
Corrupt police payments from the press are currently being investigated by one of the Metropolitan police's Operation Elveden team, one of three investigations related to the phone hacking scandal.
Brooks, MacKenzie's successor as editor of the Sun, appeared to admit before a parliamentary select committee in 2003 that the practice took place, telling the committee: "We have paid the police for information in the past."
She later denied any knowledge of specific incidences however, and claimed she had been talking about the newspaper industry in general.
All of the witnesses at the Leveson inquiry today are representing the Sun. Its current editor, Mohan, will give evidence this afternoon.