Trinity Mirror has previously dismissed Hipwell's allegations but declined to cross-examine him today at the inquiryCredit: Michael Stephens/PA
James Hipwell, the Mirror's former business correspondent, told the Leveson inquiry that a colleague at the title hacked Morgan's phone "in front" of him in an attempt to obtain information to aid Hipwell in a dispute with the tabloid.
He has previously said that a colleague offered to hack Morgan's phone, but said for the first time today that it did in fact happen.
The former business journalist, who was jailed in 2005 for his part in a share-tipping scam, also told the inquiry that hacking was "bog standard" at the Mirror and was used every day by showbusiness reporters to get stories.
He said staff did not take any steps to hide the practice from managers, and claimed it was "very unlikely" that Morgan didn't know about it.
"I cannot prove who knew what at what time, but look at his style of editorship – I think it is very unlikely he didn't know what was going on.
"There wasn't ever very much he didn't know about."
Morgan has denied any knowledge of hacking, and claimed in his evidence to the inquiry yesterday that it had not taken place at the Mirror. He also said that he was not a "hands-on" editor and that he – and most editors – only knew "about 5 per cent of what their journalists were doing".
But Hipwell heavily contradicted Morgan's testimony, alleging that the former editor was "very hands-on" and would "spend upwards of half an hour a day sitting with the showbiz team discussing their stories".
"He took a very keen interest in showbusiness. It was very close to his heart."
Hipwell said that he did not ever inform Morgan that hacking was taking place in the newsroom, because the practice seemed "perfectly acceptable".
"No because it seemed to me that what they were doing was entirely acceptable by the senior editors on the newspaper ... It was considered fair play. Any means to get a story."
Hipwell told the inquiry that Morgan would "stamp his authority on every page" of the Mirror, changing headlines and opening paragraphs of stories, occasionally even after the first edition had gone out.
"The newspaper was built on the cult of Piers, he was the newspaper, he was extremely hands on.
"Nothing happened without him knowing, he wanted to know about the details of every story, especially celebrity stories. He wanted to know where they came from".
Hipwell said Morgan was "less interested in the city than showbusiness, but because we sat next to showbiz he would also take a keen interest and ask about stories we were writing".
Morgan was himself involved in the fallout of the scam for which Hipwell was jailed. The former editor was subject to a DTI investigation after it emerged that he had purchased £67,000-worth of shares – in his and his wife's name – in a company tipped by the column.
Morgan was later cleared of any wrongdoing.
Trinity Mirror's representative at the inquiry declined to cross-examine Hipwell over his allegations, telling Lord Leveson that it "could hold up the inquiry" and "could easily lead to into 'you did – no I didn't' territory".
Trinity Mirror declined to comment, but has previously called Hipwell's allegations "totally unsubstantiated".
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