- Mulcaire had names, addresses and phone numbers of friends
- Police ignored evidence of 'long-standing and widespread criminality'
- Parliament could debate press regulation next year
Scotland Yard detectives informed Hughes in October 2006 that they had uncovered evidence Mulcaire had hacked his mobile phone while working for the News of the World. The officers told him other politicians had also been targeted by the investigator and were not willing to go public and give evidence at a trial.
But it was only in May last year that police showed Hughes the extent of the information that Mulcaire held about him, the press standards inquiry heard.
Mulcaire and News of the World royal editor Clive Goodman were jailed in January 2007 after pleading guilty to intercepting voicemail messages left on royal aides' phones.
Hughes strongly criticised Scotland Yard's failure to bring charges against anyone else despite evidence that "at least three" other senior News of the World journalists were involved in hacking his phone.
Referring to his original contact with police in 2006, he said: "What they didn't tell me was that Mr Mulcaire not only had that phone number but he had every other phone number, address, and other things.
"They did not tell me that he had, for example, the hotline in the office, which only a few people knew, my private phone number at home, which is private because four years before or something like it I had been a witness in a murder case and had had to have police protection."
The Lib Dem MP said Mulcaire also had the names, addresses and phone numbers of some of his friends. He said the investigator's notebooks showed that the News of the World had tried to stand up stories about a man and a woman linked to him "based on a salacious assumption".
"They were trying to establish relationships between me and these people, neither of which were what they would have liked them to have been," he said.
Police ignored 'long-standing and widespread criminality'
When Hughes asked detectives in 2006 whether other people were involved in phone hacking, he was told: "No, we are just proceeding against Mr Mulcaire."
He told the inquiry: "What I am very unhappy about - and it seems to me was a complete failure - was to explore whether it would be appropriate to bring charges against other defendants at the same time as part of the same inter-related set of activities."
The MP added in a statement: "I suspect that the police had shut down this investigation, much to the delight of News Group (publishers of the News of the World), and ignored evidence of long-standing and widespread criminality. I do not know of any good or persuasive reason why this should be, and it makes me extremely suspicious."
Hughes said his chances of becoming Lib Dem leader were hit when The Sun revealed in January 2006 that he had used a gay chatline. He recalled that a Sun journalist told him before the story ran that the paper had "come by" records of his telephone calls.
Before the revelations he had been favourite to replace Charles Kennedy as his party's leader, but afterwards his poll ratings dropped and he lost the leadership election.
Hughes told the hearing: "It would have been great to have won, but the consolation is probably running political parties in this country is an even more onerous burden, and it may be life has been easier without doing it, so I am fairly philosophical."
Hughes revealed to the inquiry that time is to be set aside in the next Parliamentary session for legislation on press regulation if necessary.
He said: "I have made it clear to the Deputy Prime Minister, my party leader and my colleague, that, in my view, in this parliamentary session, that will begin next spring - May 2013 - space should be reserved now in the forward planning of Parliament to deal with anything that requires legislation."
He added that any such legislation would have to be in place well before the next General Election, planned for 2015, and stressed: "Parliament will absolutely not bottle it and we mustn't run away from it."
'Unhealthy relationship' between press and politicians
Hughes continued: "The Press must act in a framework of proper behaviour and the police must act and Parliament needs to be ready to act."
Asked by Robert Jay QC about the links between politicians and the Press, Hughes said that, even early on in his career, it was evident "there was a growing unhealthy relationship".
He told the inquiry: "I understood how influential the tabloids became. I saw the desperate effort when I was in Parliament for party leaders to gain favour with the tabloids. I saw Tony Blair fly across the world to have summit meetings with the Murdoch family. I regarded it as increasingly unhealthy."
He said it was important to reach the newspapers which sold millions, as opposed to hundreds of thousands, of copies a day - in reality, the tabloids as opposed to the broadsheets.
Hughes added: "As every election grew nearer, the battle to get the most popular titles on your side would grow and it seemed to me there was a lot of compromising of principles to do that."
In some cases, he said. "parties temper their policies... to make them have maximum popular appeal" and added: "Sometimes they go in the wrong direction for populist reasons."