Andy Coulson admitted in court he had been a "careless" editor but denied that meant he was involved in phone hacking.
The former News of the World editor was being questioned in the hacking trial about what he knew of reporters' criminal activities on his watch.
The Old Bailey heard that in 2004 chief reporter Neville Thurlbeck played him voicemails of then-home secretary David Blunkett declaring his love for Spectator publisher Kimberly Fortier to justify doing a story.
Coulson went on to say he "rubber-stamped" two email requests by royal editor Clive Goodman to pay for stolen royal directories, not believing the money was really for a police officer.
And in 2005, Goodman emailed to tell him that health information on Prince Harry's injury "comes from the doc himself scammed from Helen Asprey", a member of the royal household, the court heard.
Coulson said he did not remember the email but would not have thought it was to do with hacking.
Prosecutor Andrew Edis QC asked: "Given Neville Thurlbeck had gone off the rails the previous summer, didn't you think it was worth finding out what he (Goodman) was talking about?"
Coulson said: "I clearly did not apply my mind to it but I did not think this was him indicating that Clive Goodman was hacking somebody's phone."
Mr Edis said Coulson previously described himself to the jury as a "risk-averse" editor.
He asked: "Were you a slapdash and careless editor?"
Coulson replied: "I don't think I was slapdash but with the benefit of hindsight I displayed some carelessness. I would accept that."
He said he resigned in 2007 because he did not do enough but that did not mean he was party to or involved in phone hacking.
Coulson, 46, of Charing, Kent, denies conspiring to hack phones.
He also denies two counts of conspiring with Goodman to commit misconduct in public office in relation to royal directories.
Earlier, the prosecutor dismissed Coulson's justification for exposing Mr Blunkett's affair because he let slip to his married lover there had been a terror arrest.
Coulson told jurors that hearing the then home secretary sharing "sensitive" information about terrorism and his visits to GCHQ helped convince him there was a public interest in pursuing the story based on hacking.
But the Old Bailey heard the resulting story contained no reference to it.
Mr Edis asked the witness: "If it's something the public ought to know why didn't you tell them?"
Coulson said: "I made a mistake."
Mr Edis went on: "This public interest stuff is just an invention by you built around the voicemails.
"If the terrorism arrest had mattered to you in the slightest it would have been somewhere in this story but it's not is it?"
Coulson replied: "I took the decision to follow a different path in the story."
The court heard that around the time Coulson went to Sheffield to confront Mr Blunkett about the affair, he exchanged texts and phone calls with his on-off lover Rebekah Brooks who was Sun editor at the time.
But he denied telling her what he was doing. He said: "There was closeness between Rebekah and I that the court has heard about but that did not extend to the sharing of each other's exclusives. There was a clear line drawn."
He said there was "no deal" between the NotW and the Sun to share the story.
Mr Edis said the evidence showed Thurlbeck carried on hacking Ms Fortier's phone after Coulson initially told him to stop on July 21 2004.
In light of the Blunkett story being published, judge Mr Justice Saunders asked: "Was there not a risk members of the newsdesk were doing exactly the same thing because they also got it wrong?"
Coulson replied: "There was a risk but I felt rightly or wrongly they would bring it to the attention of the lawyer or me."
He was also quizzed about the email from Goodman asking him to approve £1,000 to pay a police officer for a "green book" royal directory.
The witness said he did not recall the email, but would not have believed it was really an officer because Goodman "exaggerated his sources" and had a "tendency to create drama where it was not necessary".
He added: "Where is the policeman?"
Mr Edis replied: "He has been hidden by your bent systems."
The lawyer questioned Coulson about hacker Glenn Mulcaire's contract saying he was among the "top earners" at the NotW.
But Coulson said: "I did not consider it to be an enormous amount of money."
All seven defendants in the trial deny the charges against them.
The trial was adjourned until 10am tomorrow.