Journalist and former chat show host Piers Morgan may have mentioned phone hacking in 2004, two years before detectives arrested two News of the World figures for intercepting the voicemails of the Royal Household, the Old Bailey heard today.

Rebekah Brooks conceded that her then friend and redtop rival may have joked that he had hacked her phone while they celebrated the birthday of fellow editor Andy Coulson at a London steak restaurant - but said that she could not remember.

Witness Ambi Sitham, a lawyer attending the party as then girlfriend of celebrity publicist Neil Reading, told the court that she overheard banter between Mrs Brooks, editing the Sun, and Mr Morgan, editing the Daily Mirror.

Prosecutor Andrew Edis QC asked Mrs Brooks, giving evidence for the third week at the phone hacking trial, whether there had been a conversation about hacking at the dinner.

Mrs Brooks said: "I don't remember a discussion about phone hacking because it was the night the Sun had a big story [A leak of the Hutton Inquiry report into Iraq]."

I was very surprised at the witness's recollections that she sat next to me that night. She didn't seem to remember anything about it."

Mrs Brooks went on: "I don't remember Piers Morgan saying he hacked my phone. I don't remember that."

He may have said that. I just don't remember that."