Relations between Rupert Murdoch and the woman who until recently was the darling of his book publishing empire have descended into open fighting, with News Corporation claiming that Judith Regan was sacked for making anti-semitic remarks and counterthreats from her of libel action.

Ms Regan was sacked with Mr Murdoch's authorisation on Friday after a telephone conversation she had with Mark Jackson, a senior lawyer for News Corporation's publishing arm, HarperCollins.

The discussion led to an angry exchange of words, the details of which are disputed. According to News Corporation's spokesman, Andrew Butcher, Ms Regan accused Mr Jackson and three other prominent publishing figures of being a "Jewish cabal" that failed to support her. The other three were Jane Friedman, chief executive of HarperCollins, David Hirshey, the publisher's executive editor, and Esther Newberg, a leading literary agent.

Mr Butcher told the Associated Press that Mr Jackson, who is Jewish, had taken notes of the conversation. He alleged Ms Regan went on to say: "Of all people, Jews should know about ganging up, finding common enemies and telling the big lie."

Ms Regan has swiftly responded by issuing threats of legal action through her Hollywood-based lawyer, Bert Fields, who is no stranger to celebrity controversies, having represented Tom Cruise.

Mr Fields said the account of the conversation was completely untrue, although he did acknowledge that an argument had taken place. He said that Ms Regan's words had been twisted to give them an unintended meaning. He added that the publisher "didn't have an anti-semitic bone in her body".

The accusations and threats signal that one of the closest relationships in American publishing has imploded. Until recently Ms Regan was one of Mr Murdoch's most cherished editors. He gave her her own imprint, ReganBooks, and was richly rewarded by a string of bestselling titles.

But in November Ms Regan, who has a background in tabloid journalism at the National Enquirer, took a risk too far when she published If I Did It, in which OJ Simpson imagined how he would have killed his former wife Nicole Brown had he murdered her. Following widespread public disgust and indignation, Mr Murdoch pulled the book and the accompanying interview with Simpson conducted by Ms Regan for Fox TV, which he also owns.

According to News Corporation, Friday's row erupted during a discussion with Mr Jackson about another volume planned by Ms Regan - a fictionalised account of the life of the late Mickey Mantle, in which sexual exploits were to rank highly, much to the distress of the baseball star's family.

Even that element is disputed, however. Ms Regan's lawyer insisted the conversation centred on records she was keen to obtain from News Corporation.