The Leveson Inquiry has heard Jeremy Hunt and other officials knew of special adviser Adam Smith’s contact with News Corporation over the BSkyB bid.Smith said officials in the Department for Culture, Media and Sport asked him to liase with News Corp lobbyist Frederic Michel over various issues but admitted they may not have known the volume and extent of contact between them over the bid.He denied his contact with News Corp was inappropriate and said he would advise officials on the company’s position following conversations with Michel. He said Hunt knew he spoke to Michel regularly.The inquiry heard yesterday Smith had sent 257 text messages to Michel between November 2010 and July 2011, along with emails from his personal account. In total, the lobbyist exchanged 191 telephone calls, 158 emails and 799 text messages with staff at the DCMS.The former special adviser – who started giving evidence to the inquiry yesterday – resigned in April after he was criticised for operating as a backchannel between the News Corp and the Culture Secretary. He said today he regretted the “perception of collusion” created over the bid.Smith said Michel often “bombarded” him with information and he had used his judgment when providing News Corp with information about the bid process between June 2010 and July 2011 - when it was withdrawn over the News of the World phone hacking scandal.He said: “I wasn't specifically aware of limits. I would use my judgment on those particular issues... it wasn't uncommon to give advance notice of certain statements.”Emails between the pair showed Michel was sent Hunt’s parliamentary statement on the BSkyB bid four hours in advance, by Smith. Yesterday, Michel denied receiving a “running commentary” on government process from the special adviser.The DCMS was warned in advance James Murdoch's evidence to the inquiry - heard last month - could affect the department. It was the first time the contact between Michel and Smith was made public.In his written statement, Smith said Michel's emails were one-sided and exaggerated. One message from Michel to James Murdoch said Hunt was very frustrated after being told not to meet with the News Corp chairman.He said: "I don't particularly recall him being that frustrated about it."He said he didn’t believe he spoke to Michel about the cost of referring the bid to the Competition Commission, as relayed in another email to Murdoch, saying it would have concerned News Corp but not the DCMS.He added: “The department didn't mind one way or another. I don't remember saying that and I don't think that was the position that the department had.”Smith offered his resignation to Hunt on April 24 after reviewing the emails but was told he was just doing his job. The next day, after a meeting with senior officials – including permanent secretary John Stephens – Hunt told his special advisor: “Everyone here thinks you need to go”.Smith told the inquiry the Cabinet Office had drafted part of resignation statement, adding Smith “believed” his role was to have a close relationship with News Corp - a part he asked to be removed.He added: “I thought by this stage that the perception had been created that something untoward had gone on and therefore that was why I’d offered my resignation the evening beforehand.“‘Everyone here things you need to go’ – I suppose was in my mind confirmation that everyone else also thought that the perception had been created that something untoward had happened.”Smith regretted telling Michel he had been causing chaos in the DCMS “on your behalf” but said it had been an attempt to mollify News Corp over the bid rather than a sign of collusion.He told the inquiry: “Some of my language was too flippant and loose but I don't think the substance of what we've been through was inappropriate.”Lord Justice Leveson said of the contact: “Now there are three possibilities. The first possibility is that this reflected accurately the Secretary of State’s view. The second possibility is that it didn’t represent the Secretary of State’s view, but represented your perception of where the Secretary of State was or would become. And the third possibility is that this just doesn’t fairly reflect the conversation at all.”