James Murdoch, under fire over his handling of a phone hacking scandal that forced the closure of Britain's top-selling Sunday newspaper, has stepped down from his role at the country's dominant pay-TV company.

The company announced on Tuesday that he would be replaced as chairman by Nicholas Ferguson, the previous deputy chairman. Murdoch remains a member of the BSkyB board.

Murdoch, who was previously chief executive of BSkyB, was dealt a heavy blow in November when more than 40 per cent of the company's independent shareholders failed to back his re-election as chairman.

Al Jazeera's Laurence Lee reports.