* Cameron testifies to media ethics inquiry on live TV
* Embarrassing message from Rebekah Brooks revealed
* Fallout from scandal at Murdoch paper damages Cameron
By Estelle Shirbon and Maria Golovnina
LONDON, June 14 (Reuters) - Rupert Murdoch's UK newspaper chief told David Cameron the night before a crucial political speech in 2009 that they were "professionally in this together", an inquiry revealed on Thursday, embarrassing the man who now governs Britain.
A text message to Cameron, then in opposition, from Rebekah Brooks, then the head of Murdoch's British newspapers, was read out to the prime minister on live television during a grilling about his ties to the tycoon's News Corp.
"I am so rooting for you tomorrow not just as a personal friend but because professionally we're definitely in this together. Speech of your life? Yes he Cam!" Brooks told Cameron in that message the night before his speech to the Conservative Party's annual conference.
Testifying under oath at the Leveson Inquiry into media ethics, Cameron said Brooks had merely meant that they had a common interest because her Sun newspaper had come out in support of the Conservative Party ahead of the 2010 election.
But the message makes excruciating reading for Cameron as "We're all in this together" was the Conservatives' campaign slogan for that election. It was meant to present the party as inclusive and caring, but the Brooks message instead reinforces the perception of a party in thrall to a powerful media clique.
"Yes he Cam" was the Sun's headline the day after he made the 2009 speech, suggesting Brooks had decided how the newspaper would react to the speech before it was made.
Brooks quit her News Corp job last year over phone-hacking by reporters on her watch and has since been charged with perverting the course of justice for allegedly hiding evidence.
Cameron ordered the Leveson Inquiry last year at a time when he was under pressure to crack down on Murdoch's papers because of the revelation that reporters at the News of the World tabloid had hacked into the phone of a murdered schoolgirl.
But if Cameron had hoped the inquiry might neuter the hacking scandal, it has done the opposite by producing evidence that has raised doubts about his own judgment and caused a rift with his Liberal Democrat coalition partners.
These problems have absorbed his time and energy at a time when he is also grappling with a recession, unpopular public spending cuts and the euro zone crisis. On Thursday, he spent five hours answering questions at Leveson.
The inquiry has shown generations of politicians from both of Britain's main parties, Labour and the Conservatives, have fawned over Murdoch and people close to him.
Cameron used to sign his frequent text messages to Brooks with an affectionate "LOL", which he thought stood for "lots of love", according to Brooks's own testimony at Leveson, but his two Labour predecessors courted her just as assiduously.
Tony Blair had several private dinners with her and sent her friendly text messages, while during Gordon Brown's time as prime minister, his wife Sarah invited Brooks to "sleepover parties" at Brown's official weekend retreat.
Cameron repeatedly pointed the finger at Labour during his testimony. He dismissed as a "conspiracy theory" an accusation by Brown that the Conservatives had discreetly championed Murdoch's interests in return for support from his newspapers.
"Not only was there no covert deal, there was no overt deal, and there wasn't 'nods and winks'," Cameron said, jabbing his hand forward to emphasise the point.
He rejected the suggestion that while there may have been no explicit deal, there was an unspoken and mutually beneficial agreement between his party and the Murdoch press.
"We do slightly get into sort of witchcraft trials. How do you possibly prove that you're innocent on that basis?" he said.
WEEKENDS IN THE COUNTRY
Cameron spoke fluently but looked tense at the inquiry. He frowned in concentration as he listened to questions from lawyer Robert Jay, in contrast to his usually relaxed manner.
But his efforts were undermined when Jay read out the 2009 text message from Brooks, which referred to a problem Cameron had at the time with another Murdoch paper and suggested that he and Brooks should discuss the matter "over country supper".
The phrase is embarrassing for Cameron, who used to socialise with Brooks and other rich and powerful people connected to Murdoch during weekends at their respective mansions in a picturesque corner of the Oxfordshire countryside.
Cameron squirmed as Jay pressed him to say how often he used to meet up with Brooks in the country.
"Not every weekend ... I'd have to check. I might be able to go back and check. But I don't think every weekend. I don't think most weekends. But it would depend."
For British voters, talk of meetings "over country supper" only reinforces Cameron's image as a man of wealth and privilege who has little understanding of ordinary people's lives - an image he has tried hard to counteract, downplaying his elite upbringing at Eton, an expensive boarding school.
"I had met him when he was editor of News of the World and I felt he was a very effective individual," Cameron said of Coulson. "That was my decision; I take full responsibility for it."
Cameron said he had received assurances that Coulson was not involved in phone hacking - but those proved hollow when Coulson was forced to resign from his senior government post last year after new revelations about widespread wrongdoing at his newspaper. Coulson has since been charged with perjury.
Coulson had resigned as News of the World editor in 2007 after his paper was found to have hacked into the voicemail messages of top aides to the royal family.
In written statements to the committee, Cameron said he would not have hired Coulson if he had known about the editor's involvement.
"He denied any knowledge of the hacking but said he took responsibility for what had happened on his watch," Cameron said in the statement. "I asked him specifically about his involvement."
Cameron's decision to bring Coulson into his inner circle has left the prime minister open to questions about his judgment in choosing a man who was already linked to the phone hacking scandal.
But he said Coulson had done a good job as communications chief and had performed his duties honorably.
"This has come back to haunt both him and me," Cameron said.
He admitted seeking the advice of Rebekah Brooks, another former tabloid editor facing criminal charges, before hiring Coulson.
Both Brooks and Coulson were senior editors in Rupert Murdoch's News International empire, and Brooks eventually became chief of Murdoch's UK newspapers before she, too, was forced out because of suspected links to the scandal.
Relations with Murdoch's media empire have been problematic for Cameron. The prime minister has faced criticism for the way his government handled Murdoch's bid to take full control of British Sky Broadcasting, a lucrative satellite broadcaster in which it already had a 39 percent stake.
The prime minister admitted Thursday that the press and politicians had gotten too close in Britain and needed to change their cozy relationship.
He admitted receiving an extremely supportive text from Brooks in 2009 just before a major party conference speech.
"Professionally we're definitely in this together," she wrote to Cameron, who was then still in opposition, before going on to urge him to give the best speech of his life.
Coulson has been charged with perjury in a case touched by the phone hacking scandal. Brooks was charged last month with three counts of conspiracy to pervert the course of justice - an offense that carries a maximum sentence of life imprisonment.
Cameron did concede that he had many social contacts with Brooks and her husband Charlie Brooks - a longtime friend of Cameron who also faces criminal charges - and also met with James Murdoch, Rupert's son, for drinks occasionally.
He said James Murdoch told him personally over drinks that The Sun newspaper would back his party in a general election, switching its support to Cameron's Conservatives after years of backing the rival Labour Party.
In his testimony, Cameron spelled out his media strategy when he became Conservative Party leader, saying he tried to "win back" newspapers that had traditionally backed his party but had been successfully wooed by former Prime Minister Tony Blair and the Labour Party.
He said he courted Murdoch's newspapers but never "traded" policy decisions in exchange for editorial support, adding that talk of a conspiracy with Murdoch's company was "nonsense."
Cameron said discussions with Rupert Murdoch usually focused on major international issues such as the war in Afghanistan rather than on commercial matters.