This Sunday's issue of the News of the World will be the last edition of the paper, News International chairman James Murdoch has said.
In the past few days, claims have been made that the paper authorised hacking into the mobile phones of murdered schoolgirl Milly Dowler and the families of 7/7 bombing victims.
Mr Murdoch said proceeds from the last edition would go to good causes.
Downing Street said it had no role or involvement in the decision.
The News of the World is the UK's biggest selling newspaper and has been in circulation for 168 years.
No advertisements will run in this weekend's paper - instead any advertising space will be donated to charities and good causes.
News International has refused to comment on rumours that The Sun could now become a seven-day-a-week operation.
"What happens to The Sun is a matter for the future", a spokeswoman for News International said. The Sun, another News International tabloid, is currently published from Monday to Saturday.
In a statement made to staff, Mr Murdoch said the good things the News of the World did "have been sullied by behaviour that was wrong - indeed, if recent allegations are true, it was inhuman and has no place in our company".
"The News of the World is in the business of holding others to account. But it failed when it came to itself."
He went on: "In 2006, the police focused their investigations on two men. Both went to jail. But the News of the World and News International failed to get to the bottom of repeated wrongdoing that occurred without conscience or legitimate purpose.
"Wrongdoers turned a good newsroom bad and this was not fully understood or adequately pursued.
"As a result, the News of the World and News International wrongly maintained that these issues were confined to one reporter.
"We now have voluntarily given evidence to the police that I believe will prove that this was untrue and those who acted wrongly will have to face the consequences. This was not the only fault.
"The paper made statements to Parliament without being in the full possession of the facts. This was wrong.
"The company paid out-of-court settlements approved by me. I now know that I did not have a complete picture when I did so. This was wrong and is a matter of serious regret."
He reiterated that the company was fully co-operating with the two ongoing police investigations.
He added: "While we may never be able to make up for distress that has been caused, the right thing to do is for every penny of the circulation revenue we receive this weekend to go to organisations - many of whom are long-term friends and partners - that improve life in Britain and are devoted to treating others with dignity."
Labour MP Tom Watson told Sky News it was "a victory for decent people up and down the land, and I say good riddance to the News of the World"
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