Lord Justice Leveson, the man who prosecuted Rose West, will hold his inquiry at the Royal Courts of Justice.
David Cameron and other senior politicians are also likely to be questioned over their links to News International, the parent company of the News of the World.
The proceedings will be held in the same court as the official inquiry into the death of Diana, Princess of Wales. Lord Justice Leveson is thought to be keen for the proceedings to be broadcast live to ensure they are seen to be transparent.
The prospect of courtroom evidence will increase the impression that the Leveson inquiry is an unofficial “trial” of key players in the phone hacking scandal.
Over the summer, a handful of officials from the Cabinet Office and Treasury Solicitor’s Office have been planning how the inquiry will be run.
The team will set up a full-time office in the Royal Courts of Justice before the formal start of proceedings in October. The focus of the inquiry is “the culture, practices and ethics of the press in the context of the latter’s relationship with the public, police and politicians”.
It was ordered by Mr Cameron in the wake of the phone hacking scandal that led to the closure of the News of the World and held out the possibility of tougher press regulation in future.
Lord Justice Leveson has powers firstly to invite witnesses to give evidence, and then to compel them under the Inquiries Act 2005.
Sources close to the inquiry said Lord Justice Leveson would not be constrained in who he asked to testify, adding that the judge “will go where the evidence takes him”.
Dozens of letters have been sent to potential witnesses asking if they will help the inquiry. The deadline for submissions to the inquiry is tomorrow.
The Murdochs, as well as Andy Coulson and Rebekah Brooks, both former editors of the News of the World, are likely to be called.
Mr Cameron, who subsequently hired Mr Coulson to work for the Conservative Party and then in 10 Downing Street, could also be asked to give evidence. A source close to Downing Street said the Prime Minister would be happy to give evidence if asked.
The inquiry will begin with a series of seminars at the end of next month, attended by senior journalists and other interested parties. They will examine topics including the law, ethics of journalism and the “practice and pressures of investigative journalism”.
They will also look at how press regulation will protect the integrity, freedom and independence of the press, while ensuring the highest standards.
The hacking inquiry might not be complete by next summer after Mr Cameron expanded it to include broadcasters and bloggers.
Opening the inquiry, Lord Justice Leveson said he would “strive” to complete his inquiry after 12 months but said this would not happen “at all cost”.
The inquiry team, which includes George Jones, the former political editor of The Daily Telegraph, and Shami Chakrabarti, the director of the civil liberties group Liberty, would have to “exercise very considerable discipline and, where appropriate, restraint” to deliver the report on time.