By Keith Weir and Peter Griffiths

LONDON (Reuters) - David Cameron defended his handling on Monday of a corruption scandal around Rupert Murdoch's media empire which has swept away Britain's top police chief and raised questions about the prime minister's own future.

At a news conference in Pretoria, where he began what will be a curtailed visit to Africa, Cameron defended hiring former tabloid editor Andy Coulson, a figure at the center of the scandal, as his spokesman.

He rejected veiled criticism from the police chief, who quit after coming under fire for appointing Coulson's former deputy as a media adviser to his force.

"The situation in the Metropolitan Police Service is really quite different to the situation in government," Cameron said in response to remarks by outgoing Metropolitan Police Commissioner Paul Stephenson, who contrasted the prime minister's response to hiring one ex-journalist to his own resignation over the other.

Having cut short a planned week in Africa as the scandal snowballed, Cameron also said parliament would delay its summer recess to let him address lawmakers again on Wednesday.

The prime minister came under further pressure on Sunday with the resignation of Stephenson and arrest of Rebekah Brooks, who ran British newspapers for Murdoch's News Corp.

Murdoch, the 80-year-old Australian-born magnate whose grip on Britain's media and politicians of all parties have been shaken by two weeks of outrage, faces a parliamentary committee on Tuesday. He and his son James, 38, as well as Brooks, can expect a fierce grilling over allegations the News of the World tabloid hacked thousands of people's voicemails and bribed policemen.

The scandal may be reshaping the British establishment, with the press, police and politicians all facing harsh questioning from the public over cozy relationships and a failure over many years to protect the vulnerable, including child crime victims and the nation's war dead, from intrusive tabloid journalism.

The affair has prompted Murdoch to shut down the 168-year-old News of the World, Britain's top-selling Sunday paper, and to drop a bid for pay-TV network BSkyB that was a key part of its global expansion in television. That in turn has raised questions from investors over the family's management.

The shares ended 4.1 percent lower at A$14.16.

CAMERON UNDER FIRE

In resigning on Sunday, police chief Stephenson said he had done nothing wrong but did not want distractions from the affair to hamper security preparations for next year's London Olympics. And he aimed unusually sharp, if veiled, barbs at Cameron.

Amid public anger at the police's refusal for several years to act on allegations of widespread phone hacking, Stephenson had faced questions over his senior officers' closeness to News International. He was particularly under fire over the appointment of Neil Wallis, a former deputy editor at the News of the World, as a public relations adviser to his force.

Stephenson noted that Wallis, who was arrested last week and is one of 10 journalists so far being questioned as suspects in the phone hacking and bribery case, had not been linked to the scandal when he was hired. He contrasted that to Cameron's hiring in 2007 of Coulson, Wallis's editor at the paper.

Coulson resigned as editor when his royalty correspondent was jailed for hacking the phones of royal aides, although he denied knowing of any wrongdoing. Coulson quit the prime minister's office in January this year as police reopened their investigation of the paper. He was arrested this month.

Asked about Stephenson's comments on his appointment of Coulson, Cameron said: "I don't believe the two situations are the same in any shape or form.

"There is a contrast with the situation at the Metropolitan Police, where clearly the issues have been around whether or not the investigation is being pursued properly.

"In terms of Andy Coulson, no one has argued that the work he did in government in any way was inappropriate or bad. He worked well in government, he then left government."

He reiterated the steps he has taken to tackle the scandal, notably funding the renewed police investigation and setting up an independent public inquiry in response to revelations that the hacking extended beyond the voicemails of the rich, famous and powerful to include those of abducted teenager Milly Dowler, later found murdered in 2002, and many other private citizens.

POLITICAL DAMAGE

Cameron, a 44-year-old former public relations executive, revived Conservative fortunes after taking the leadership in 2005, winning power 14 months ago after 13 years of Labour rule.

Many see the scandal as his biggest test to date, though few see anything other than a remote threat to his political future.

"This crisis has understandably shaken the Cameron circle. Some dared to hope the storm had passed," wrote Andrew Grice, political editor of the Independent newspaper. "Yesterday they realized the storm is still gathering pace. It could last for years. No one knows where it will end, least of all Mr Cameron."

Tim Bale, politics professor at the University of Sussex, said: "It has become almost a crisis of governance in the United Kingdom ... There is a sense of things sliding out of control.

"The actual text of (Stephenson's) statement pointing to parallels between himself and the prime minister is quite breathtaking. It won't make Mr Cameron do the same thing, but it reminds people once again of the Coulson problem."

Iain Dale, a prominent Conservative commentator, wrote on his blog: "I can't believe I am even writing this, but it is no longer an impossibility to imagine this scandal bringing down the prime minister, or even the government."

Yet, he said, that remained far-fetched, as did Toby Young, a commentator blogging at the Conservative-supporting Daily Telegraph, who cited Cameron's assured demeanor in public and efforts to highlight Labour's own long relationship with the Murdoch press as reasons for expecting the crisis to blow over.

"I don't rule out the prime minister being toppled by this scandal," Young wrote. "I just don't think any of the details that have emerged so far, or his handling of the crisis, put him in serious jeopardy."

As well as the issue of hiring Coulson, who edited the News of the World from 2003 to 2007, Cameron has come under fire for his friendship with Brooks, Coulson's predecessor as editor.

She will face parliament's media committee on Tuesday, though many believe her answers will be curtailed due to her having been arrested and bailed after 12 hours of questioning at a London police station on Sunday. Alongside her will be Murdoch himself and his son James, the chairman of News International.

Lawmakers, who gave senior police officers a fierce grilling last week, are expected to do so again on Tuesday in a separate committee hearing covering interior ministry affairs.

Labour, whose hitherto low-profile new leader Ed Miliband has capitalized on Cameron's discomfort, seized on Stephenson's reference to the Coulson appointment in his resignation speech.

"It is striking that Sir Paul Stephenson has taken responsibility and answered questions about the appointment of the deputy editor of the News of the World," Labour's home affairs spokeswoman Yvette Cooper said in a statement.

"The prime minister still refuses to recognize his misjudgment and answer questions on the appointment of the editor of the News of the World at the time of the initial phone hacking investigation."

With politicians from Australia to the United States demanding to know if similar abuses occurred elsewhere in Murdoch's global media business, Murdoch has been forced uncharacteristically onto the defensive and the position of his son James as heir-apparent has been called into question.

Labour leader Miliband called for new rules to curb how much of Britain's media could be controlled by one proprietor: "Concentrations of power damage our culture," he said.

Murdoch, who some media commentators say at first misjudged the strength of public anger, published apologies in several British newspapers at the weekend.

He also met and apologized to the family of murdered schoolgirl Milly Dowler in an acknowledgment of the likely truth of allegations that a News of the World investigator not only listened in to their missing daughter's voicemails but may have deleted some to make way for more -- misleading police who were hunting for her and giving her parents false hope she was alive.

($1 = 0.940 Australian Dollars)

(Additional reporting by Jodie Ginsberg in Pretoria and Stephen Mangan, Christina Fincher, Sven Egenter, Ralph Gowling and Michael Roddy in London; Writing by Alastair Macdonald, editing by Mark Trevelyan)