An email conversation between former News of the World royal editor Clive Goodman and Andy Coulson about palace police payments was the "clearest possible evidence"of conspiracy to commit misconduct in a public office and was linked to phone hacking, a jury heard.
A cash payment of £1,000 was made to a David Farish, which turned out to be a false name, for a telephone directory with all the home numbers of the royal family and their household staff, the Old Bailey heard.
On the same day the directory was bought, which included an address and landlines but no mobile number for Sir Michael Peat - who the paper wrongly thought was having an affair - private investigator Glenn Mulcaire was tasked with investigating him, the court heard.
A mobile number was later handwritten on to the book, prosecutor Andrew Edis QC said.
Mr Edis added: "Glenn (Mulcaire) carried on with his investigation and if that's right this book is directly useful for phone hacking, and in fact used for phone hacking, because Sir Michael Peat is targeted on the very same day the book is paid for."