A unit of Rupert Murdoch's News Corporation allegedly cracked the smartcard codes of ONdigital in a bid to undermine the company's success, according to claims aired on BBC's Panorama programme.

After NDS, a software company owned by News Corp, allegedly cracked the system, the access codes appeared on a pirate website known as THOIC where users could use them for illegally accessing free digital television. On BBC Panorama last night,  THOIC operator Lee Gibling said he had received over £60,000 a year from Ray Adams, NDS' head of security, for the work.

ONdigital, owned by Granada and Carlton, part of ITV, later went out of business amid mass counterfeiting. This cleared the pay-TV field and left Sky as the key service.

News Corp has denied the accusations. It also owns the troubled News International business surrounded by phone and PC hacking allegations, and is under great pressure over its suitability under UK media regulations to take full control of BSkyB.

Adams, NDS' head of security, was supplying the codes so that pirates could make counterfeit ONdigital smartcards, Gibling claimed.

Gibling said he later destroyed with a sledgehammer the computer equipment used, and later accepted a severance payment with a confidentiality clause. THOIC was quickly closed when pirates discovered he was taking payments from NDS, and Adams demanded he go into hiding, he said.

NDS has admitted it was paying Gibling, but only to catch "hackers and pirates" accessing its codes.

"It is simply not true that NDS used the THOIC website to sabotage the commercial interests of ONdigital/ITV digital, or indeed any rival," the company said.

Adams had knowledge of ONdigital codes because it was part of "research and analysis" within the pay TV industry, which worked together to tackle piracy, NDS said. Adams has denied he had the codes.

In 2002 the company that supplied the ONdigital smart cards, Canal Plus, took NDS to court over alleged hacking of its codes. But the case was dropped, and under a deal Murdoch bought some Canal Plus assets.