Rebekah Brooks and Andy Coulson were so close at the time of the Milly Dowler story that he could trust her with any confidence, she told the phone hacking trial today.

The story - based on a hacked voicemail - was published in the News of the World in April 2002 while Mr Coulson, the deputy editor, was in charge in London and Mrs Brooks was on holiday in Dubai.

Under questioning from chief prosecutor Andrew Edis QC, Mrs Brooks, the editor, agreed that she had spoken to Mr Coulson by phone while she was away.

Turning to the personal relationship between the two, Mr Edis asked Mrs Brooks whether it had encompassed the month of the Dowler story.

At the start of the trial, Mr Edis suggested that a draft letter from Mrs Brooks to Mr Coulson in February 2004, found by police on her computer, indicated that the affair had lasted for six years, thus taking the Dowler period.

However in her evidence, Mrs Brooks denied that, saying that the "physical intimacy" with Mr Coulson had begun in 1998, continued between 2003 and 2004 and resumed again in 2006.

Mrs Brooks told the court today that she had shared work confidences with Mr Coulson, but that they had had a "rocky time" after they had broken up and she had written the letter.

Telling the court for the first time that Mrs Brooks had written in it that she had been waiting for Mr Coulson "for six years," Mr Edis asked her: "It suggests, doesn't it, that the relationship had lasted six years."

Now, Mrs Brooks, there would be no reason for you to lie in respect of this at all, would there?", to which she replied: "No."

Put to her that the relationship had lasted for six years, she told the Old Bailey: "That's not true...We just didn't have an affair for six years. We were close. We were good friends over that time."

Mr Edis asked her: "Well, you understand the question, which is that you had communications with Mr Coulson by telephone in April 2002 when you were in Dubai and he was in London."

She replied: "Yes, that's right."

He continued: "At that time were you talking to him in that confidential way we talked about?", to which she said: "We were close friends, yes... I trusted him as a friend and as a deputy editor."

Mr Edis said: "But was it more than that? Was the relationship in April 2002 such that Mr Coulson could completely trust you with any confidence at all?"

Mrs Brooks, looking upset, replied: "Yes."

The case then broke for lunch.

In earlier exchanges, Mrs Brooks, who become editor of the News of the World in May 2000, denied that she had deliberately hidden the contract awarded to NoW phone hacker Glenn Mulcaire in September 2001, to avoid having to explain what he was doing.

Mulcaire - who has pleaded guilty to hacking Milly's phone - was paid £92,000 a year by the NoW under Mrs Brooks's editorship.

Under the NoW's financial controls at the time, the value of the annual contract should have been approved by Mrs Brooks and the paper's managing director Clive Milner - but Mulcaire's contract was paid weekly in tranches of £1,719.

There is no record of Mrs Brooks or Mr Milner approving the annual contract.

Mr Edis asked her: "You cannot give Mr Milner any explanation of what Mr Mulcaire was doing because it involved criminality - that's why this contract had to be hidden, wasn't it?"

Mrs Brooks told the court: "I completely disagree.”

The prosecutor added: "What I'm suggesting to you, Mrs Brooks, is that effectively the books were cooked to prevent anyone finding out what Mr Mulcaire was actually doing.”

Mrs Brooks replied: "But I didn't cook any books."

Mrs Brooks, editor until 2003, and Mr Coulson, deputy editor of the NoW between 2000 and 2003 and editor between 2003 and 2007, deny conspiring to hack voicemails. The case continues.