Cameron said if Coulson, a former editor at Rupert Murdoch's now-defunct News of the World tabloid, had lied about the hacking affair, he would address the issue differently. He also denied that anyone on his staff had tried to get the police to drop their hacking investigation.
"You live and you learn, and believe you me, I have learned," Cameron said of his decision to hire Coulson. "The greatest responsibility I have is to clean up this mess."
Cameron told lawmakers an inquiry would be launched into the relationship between press, police and politicians. He also said the hacking affair also raises questions over the ethics and values of London's police force, and he vowed to look bringing in new leadership to the police force.
Cameron's comments came just a day after media magnate Rupert Murdoch denied personal responsibility in the scandal that began with his now-defunct tabloid, News of the World.
Cameron cut short his Africa trip and returned home late Tuesday to appear before the House of Commons, which delayed its summer break by one day to debate issues engulfing police, politicians and Murdoch's global communications empire, News Corp.
Lawmakers pressed Cameron on why he hired Coulson despite warnings and how much the prime minister knew about the phone hacking investigation.
Cameron reportedly met with News Corp. executives more than two dozen times in a little more than a year.
Britain's Conservative Party said Tuesday it had learned that another recently arrested phone-hacking suspect, former News of the World executive editor Neil Wallis, may have advised Coulson before the 2010 national election that put Cameron in power. It said Wallis was not paid for the advice, however.
Meanwhile, a House of Commons committee on Wednesday blasted both News International, the News Corp. unit which operates the British papers, and London Metropolitan Police for their performance on the scandal.
"We deplore the response of News International to the original investigation into hacking. It is almost impossible to escape the conclusion ... that they were deliberately trying to thwart a criminal investigation," said the Home Affairs committee, which has been grilling past and present Metropolitan Police officials about their decision not to reopen the hacking investigation in 2009.
However, the panel said it was astounded that police would blame the newspaper's tactics for their failure to mount a robust investigation.
"The difficulties were offered to us as justifying a failure to investigate further and we saw nothing that suggested there was a real will to tackle and overcome those obstacles," the committee said.
The committee said it was "appalled" by testimony on Tuesday from Dick Fedorcio, director of public affairs for the Metropolitan Police press office, about a short-term contract given to Wallis to advise the department on press and publicity. Fedorcio testified that he couldn't remember who recommended Wallis and "attempt to deflect all blame" to Assistant Commissioner John Yates, who has resigned as head of the anti-terrorist command.
The revelation of the Wallis contract led to the resignation on Sunday of the police chief, Paul Stephenson.
Buckingham Palace reacted sharply to a claim by legislator Chris Bryant that the palace had raised concerns with Cameron's office over his decision to hire Coulson.
"It is outrageous to suggest this," said a palace spokesman, speaking on condition of anonymity in line with royal practice.
Though apologetic during a three-hour appearance on Tuesday, Murdoch insisted he was at fault only for trusting the wrong people at the News of the World, which he described as a tiny portion of his vast media empire.
Murdoch said he had known nothing of allegations that staff at his News of the World tabloid hacked into cell phones and bribed police to get information on celebrities, politicians and crime victims, and that he never would have approved such "horrible invasions" of privacy.
Despite lawmakers' suggestions that his organization encouraged such behavior, Murdoch was unflappable -- even after a protester rushed to throw a foam pie at him during the hearing.
A News Corp. attorney partially blocked the attack and Murdoch's 42-year-old wife, Wendi Deng, slapped the prankster. After the protester was arrested, the billionaire simply shed his splattered suit jacket and continued answering questions.
On Wednesday, police said they had charged Jonathan May-Bowles, 26, with behavior causing harassment, alarm or distress in a public place.
There may be more revelations to come. Only a fraction of some 3,870 people whose names and telephone numbers were found in News of the World files have been contacted by police so far. It remains unknown how many of those names were actually victims of hacking.
As the scandal exploded this month, Murdoch shut down the 168-year-old News of the World, gave up on buying full control of British Sky Broadcasting, Britain's biggest commercial television company, and accepted the resignations of two top executives.
Meera Selva and Robert Barr contributed to this report from London.