Ex-royal editor Clive Goodman was jailed in 2007 along with private investigator Glenn Mulcaire for eavesdropping on the voicemails of royal aides. Goodman is on trial again, alongside Coulson and five others, over wrongdoing at the now-defunct Rupert Murdoch-owned tabloid. All have pleaded not guilty.
Speaking about hacking, Goodman said "lots of other people at the (newspaper) were doing this and I was the one that got caught."
"Andy Coulson actually set up the payments to facilitate all this," Goodman said.
Goodman said after his arrest that Coulson told him to claim he had been a "lone wolf." Goodman said he was told he would be able to return to work after serving his prison sentence as long as he didn't implicate anyone else.
He later accepted a financial settlement from the newspaper and signed a confidentiality agreement.
The News of the World maintained for several years that hacking had only been carried out by Mulcaire and Goodman.
That "rogue reporter" claim dissolved in 2011 when it was revealed that journalists at the tabloid had routinely eavesdropped on the voicemail messages of celebrities and other people in the public eye, including a murdered 13-year-old girl.
The scandal led Murdoch to close down the News of The World and triggered extensive police investigations.
Dozens of people have been arrested, and three former News of the World news editors have pleaded guilty to phone hacking.
Coulson, who left the paper in 2007 and went on to become Prime Minister David Cameron's communications chief, denies charges of conspiring to hack phones and to bribe officials for information.
Goodman is accused alongside Coulson of paying officials for royal phone directories. He denies the charge.