At the phone hacking trial today Clive Goodman admitted exaggerating the importance of his stories, but denied being "over-dramatic" or "florid" in his dealings with the News of the World executives.

In emails to the editor Andy Coulson, Mr Goodman, then royal editor, referred to the need for the paper to pay his palace policemen sources in cash, adding that they could all go to jail if anyone found out.

Cross-examining Mr Goodman, Mr Coulson's lawyer Timothy Langdale QC, read out an email he sent to Mr Coulson on 10 May 2002 about the forthcoming trial of Princess Diana's former butler Paul Burrell.

In the message, Mr Goodman warned him there could be trouble if Mr Burrell's former publicist, Max Clifford, divulged secrets about the court case, telling him: "If he so much as whispers it we're all going to jail for contempt.”

Mr Langdale questioned whether "we're all going to jail" was "florid language", to which Mr Goodman replied, to laughter, that readers of the News of the World would realise it contained dramatic language.

Mr Langdale countered that Mr Goodman personally would "tend to use florid and over-dramatic language.”

No, Mr Goodman said, adding that he would use words to make a point.

Mr Langdale asked: "Over-exaggeration?", to which the former royal editor said: "Yes, reporters do talk up stories.”

Challenged about another email to management in which Mr Goodman warned that he could end up wearing "concrete wellies" unless a contact was paid, he told the court he didn't think anyone would have taken that comment seriously.

Mr Langdale put it to Mr Goodman: "Quite often you would be talking nonsense but pretending not to." Mr Goodman told the court: "I don't think so.”

Mr Goodman and Mr Coulson deny conspiring to commit misconduct in public office. The case continues.