Asked by Robert Jay QC about last July's decision to close the 168-year-old title, after the Guardian's revelations on the Milly Dowler phone hacking, Murdoch said: "I panicked - but I'm glad I did.
"I'm sorry I didn't close it years before and put [out] a Sunday Sun."
He added: "This whole business with the News of the World was a serious blot on my reputation."
In its last full month of circulation, last June, the News of the World recorded a circulation of 2,667,428, according to official figures from the Audit Bureau of Circulations.
The Sun on Sunday launched on 26 February this year and reported an average weekly circulation of 2.43 million in its first full month on the newsstands.
Murdoch added today: "We are now a new company. We have new rules and new compliance officers. I think we have shown with the Sun that you can still produce the best newspaper without the bad practices that were disclosed."