News Corp has withdrawn its $12 billion bid to buy out the 61 percent of broadcaster BSkyB it does not already own after the government turned on Rupert Murdoch over a phone hacking scandal.

The British parliament was due to pass a non-binding vote on Wednesday afternoon to tell Rupert Murdoch to drop his bid after News Corp's UK newspaper arm News International was engulfed in a scandal over phone hacking.

BSkyB shares were down 3.6 percent after the news.

We believed that the proposed acquisition of BSkyB by News Corporation would benefit both companies but it has become clear that it is too difficult to progress in this climate, said Chase Carey, Deputy Chairman, President and Chief Operating Officer, News Corporation.

News Corporation remains a committed long-term shareholder in BSkyB.

(Reporting by Kate Holton)

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