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The owner of the Sun lost £68m last year as newspaper sales fell and the company continued to deal with the fallout of the phone-hacking scandal.

Daily sales of the Sun fell 8% to 1.38 million in the year to July, but it remains the UK's top paid-for paper.

Meanwhile, the Sun on Sunday sold an average of 1.16 million copies a week, 111,000 fewer than the year before.

The paper's owner, News Group Newspapers also revealed a £26.7m legal bill related to phone hacking.

"Following the allegations of voicemail interception and inappropriate payments to public officials, there have been a number of civil cases against the company, most of which have been settled, or are in the process of being settled," the firm said.

The News of the World was closed in 2011 after it was revealed that it had obtained stories by listening in to the private voicemail messages of celebrities and even the murdered teenager Milly Dowler.

News Group Newspapers said the final bill "may or may not be significantly higher" than the £26.7m it had put aside to deal with the hangover from the scandal.

It was higher than the previous year when the newspaper owner put aside £14.7m to pay for "claimants' legal fees and damages".

The increase follows a spate of high-profile settlements between celebrities and the former owners of the now-defunct paper. Last year, singer Sir Elton John, actress Elizabeth Hurley and campaigner Heather Mills settled their phone-hacking cases against the News of the World for undisclosed sums.

Despite falling sales of the print edition, News Group Newspapers said more people were visiting the Sun's website.

It said 32.8 million adults in the UK visited the site a month, 3.6 million more than the previous year.