He also said he had been humbled by the allegations and apologized for the "horrible invasions" of privacy.
Politicians from both the Conservative Party and Labour Party have been tainted by the scandal.
During the emergency session Wednesday, Miliband reminded Cameron that his own Deputy Prime Minister Nick Clegg — part of Britain's coalition government — warned Cameron against bringing Coulson into Downing Street last year as communications chief.
Clegg sat stone-faced during much of Wednesday's rowdy session.
Cameron later countered, saying that the Labour Party was also guilty of hiring questionable characters, including Miliband's current strategist, Tom Baldwin, another former Murdoch journalist from a different paper.
Conservative donor Lord Ashcroft, a Belize-based billionaire who has funded the party for more than a decade, has accused Baldwin of trying to get private banking information in 1999.
Cameron defended Coulson's work and said if it emerged that Coulson had lied to him about his role in the hacking case he would take it seriously.
"Andy Coulson is innocent until proven guilty," Cameron said.
Britain's Conservative Party announced Tuesday it had just learned that another recently arrested phone-hacking suspect, former News of the World executive editor Neil Wallis, may have advised Coulson before the 2010 national election that put Cameron into power. It said Wallis was not paid for the advice, however.
Cameron also said the hacking affair raises questions over the ethics and values of London's police force and vowed Wednesday that he would bring in new leadership to the force. Two top police resigned this week over their close ties to Wallis.
Meanwhile, a House of Commons committee on Wednesday blasted both News International, the News Corp. unit that operates the British papers, and London Metropolitan Police for their performance on the scandal.
"We deplore the response of News International to the original investigation into hacking. It is almost impossible to escape the conclusion ... that they were deliberately trying to thwart a criminal investigation," said the Home Affairs committee, which has been grilling past and present Metropolitan Police officials about their decision not to reopen the hacking investigation in 2009.