GEORGE Galloway is considering further legal action against publishers of the News of the World in connection with an alleged encounter with the "Fake Sheikh" in a London hotel.

It comes after the former Glasgow Kelvin Labour MP won an undisclosed sum of damages from News Group Newspapers (NGN) for having his phone hacked.

Mr Galloway is unable to speak of the details of the settlement due to confidentiality agreement but it is understood that the deal does not prevent him from taking further action against the company.

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He was one of 37 public figures who settled their damages claims with the firm earlier this week.

It is believed Mr Galloway may now try and pursue the publisher over an apparent sting set up by the former tabloid's investigation editor Mazher Mahmood, known as the Fake Sheikh given his often-used disguise of Arab robes, in a London hotel room six years ago.

He was contacted by someone posing as a representative of a wealthy Arab benefactor to arrange a meeting. A source said: "George turned up to this meeting reluctantly and a man tried to suborn him by offering money for his campaign. George said this couldn't happen because he was not a British citizen. This man then started spouting anti-semitic stuff and George was very suspicious."

Sources said Mr Galloway is to claim his phone was hacked around the time of the meeting, given the tabloid raised an injunction against the former MP and an aide as they prepared to host a press conference to reveal the indentity of the reporter.

Suspicions about his mobile phone security intensified when a planned meeting between Mr Galloway and Mr Mahmood's cousin was cancelled at the last minute, it is believed.

Mr Mahmood has been recalled to the Leveson Inquiry into press ethics.

Senior television executives including BBC director-general Mark Thompson will also give evidence next week. Mr Thompson will be asked about how the BBC is regulated by Ofcom.

Meanwhile, an Iranian news network which employs Mr Galloway as a presenter went off the air yesterday after losing its licence. London-based channel Press TV halted its broadcasts after action by Ofcom.

A statement released by the watchdog said it was apparent that "editorial control of the channel rested with Press TV International (based in Tehran) – in breach of broadcasting rules which state the licence holder must have general control of programming.