Coulson resigned as Cameron's spokesman in January 2011 when police opened a new investigation into the scandal. He insisted he was innocent but said he had become a distraction for the government.
Questioned Thursday, Coulson said the jailing of two News of the World employees over phone hacking in 2007 did come up in discussions with senior party members before his job offer.
He told the inquiry he had told them and Cameron what he has said repeatedly -- that he knew nothing about the practice of hacking under his leadership of the paper.
Coulson said he never witnessed a conversation that was "inappropriate" between members of the government and News International.
He dismissed as a conspiracy theory the suggestion that Conservatives had struck some kind of deal on News Corp.'s takeover of BSkyB in return for Murdoch's support.