Vince Cable has said News International made "veiled threats" against Liberal Democrat MPs in an attempt to intimidate him into letting the company take control of BSkyB.
Giving evidence to the Leveson inquiry on Wednesday, the business secretary said party colleagues had been told by representatives of the company that if he chose to make a decision that it was unhappy with then the Lib Dems would be "done over" in the Murdoch press.
Cable has admitted it was a mistake to tell undercover reporters in December 2010 that he had declared "war" on Murdoch while he was supposed to be judging the BSkyB bid.
But he said he did it to show the media giant he would not be intimidated and acted impartially at all times.
"I took this seriously, I was very concerned," he said. "I had myself tried to deal with process entirely properly and impartially."
"I frankly stored up my anger at what was taking place but in that very special and tense situation I rather offloaded my feelings."
In December 2010 Cable told undercover reporters from the Daily Telegraph posing as constituents: "You may wonder what is happening with the Murdoch press... I have declared war on Mr Murdoch and I think we’re going to win."
Following the publication of the story in the paper, Cable was stripped of his responsibility for adjudicating the bid by David Cameron after the prime minister deemed him to have shown he was not an impartial adjudicator of the bid.
Despite this Cable insisted today that he sought to "uphold the principle and perception of an impartial and fair process" while in charge of the bid and that an "independent mind did not mean a blank mind".
"Like many Liberal Democrats I was concerned about the unhealthy political influence of some newspaper proprietors including the Murdochs; but this was not a view about the particular circumstances of the BSkyB takeover," he said.
The job was then handed to culture secretary Jeremy Hunt who is under pressure to resign following accusations that he misled parliament over contacts he had with News Corp while he was in charge of the quasi-judicial process.
Cable told the Leveson inquiry on Wednesday: "Clearly, I should not have volunteered my unprompted opinion, even in a private, confidential conversation in a constituency surgery. I subsequently apologised."
"The confrontational way in which my personal views of News Corporation were expressed was due to reports coming back to me of how News Corporation representatives had been approaching several of my Liberal Democrat colleagues in a way I judged to be inappropriate."
Cable added that there were "high levels of tension" in his office at the time he made the comments as a group of protesters had tried to force entry.
"I had invited in a small group of protestors and had just finished a highly confrontational discussion with them.
"My own lack of concentration in the subsequent interview had a lot to do with this abnormal and tense environment."
The business secretary told the inquiry into press ethics that he did not believe the Daily Telegraph had been justified in recording what he believed to be a private conversation and had "seriously undermined trust between MPs and their constituents".
Jeremy Hunt is due to appear before the Leveson inquiry tomorrow.