Andy Coulson says he told David Cameron that his role as the Conservatives' communications chief would not guarantee the party would get support from his former newspaper, the News Of The World.
Giving evidence to the Leveson Inquiry, the tabloid's ex-editor said he explained to Mr Cameron and George Osborne that his background at News International would not ensure backing for the Tories.
"I do remember explaining that my News International background should not therefore be seen as some sort of guarantee of the support of either of those papers (the News Of The World and its sister paper The Sun)," Mr Coulson said.
The 44-year-old was appointed as the Tories' communications director in July 2007 and then took up a similar role in Downing Street when Mr Cameron became prime minister after the general election in May 2010.
Mr Coulson resigned from his job as Mr Cameron's spin doctor last year following the phone hacking scandal which overshadowed his role at No.10.
His testimony was the first time he has spoken publicly since being arrested by Scotland Yard on suspicion of phone hacking and corruption last July. He was bailed and has not been charged.
Mr Coulson was editor of the News Of The World (NOTW) when its former royal editor Clive Goodman was jailed for phone hacking, though Mr Coulson has always denied he knew it was going on at his paper.
The Government has admitted that, "given what we now know about the extent of phone hacking at the NOTW", Mr Coulson should not have been hired by Mr Cameron in the first place.
Mr Coulson described his relationship with News Corporation chief Rupert Murdoch - his boss while editor - as "warm and supportive".
He told the inquiry Mr Murdoch would often call him on a Saturday night ahead of the NOTW's publication, but then would sometimes not make contact for several months.
He said he "enjoyed working in his company", but said he did not want to "overplay" their closeness.
Mr Coulson went on to dismiss rumours that he kept a potentially explosive diary of his time in the job.
But he did say there were "notes that I would take in the course of my work both in opposition and in Government".
Mr Coulson said he still considered Rebekah Brooks - one-time editor of the NOTW and The Sun, and latterly chief executive of News International - as a friend, but added: "We haven't spoken for a while for obvious reasons."
He said Mr Cameron had a "family connection" with Mrs Brooks.
"She was his constituent. Charlie Brooks is a constituent of his, so they lived relatively close to his constituency home but there was, I think, a fairly long historic family connection."
Mrs Brooks, 43, is to give evidence at the inquiry on Friday.
She has twice been arrested and bailed by Scotland Yard detectives investigating allegations of phone hacking. She has not been charged.
Mrs Brooks is one of the biggest media players in Britain and good friend of prime ministers past and present - Lord Justice Leveson has already heard she hosted a Christmas dinner at her country home where Mr Cameron discussed the takeover of BSkyB with James Murdoch .
A new book claims that until recently Mrs Brooks and Mr Cameron regularly exchanged text messages, and some political commentators believe the next couple of days at the Leveson inquiry could be very damaging for the Prime Minister.
Political columnist Peter Oborne told Sky News: "If there was a suggestion that Downing Street was doing a commercial favour for News International or News Corp then the future of David Cameron inside Number 10 would come into question."
Mr Cameron and other senior political figures will give their own evidence to the inquiry in due course, but there is no doubt they will be paying very close attention to what is said at the Royal Courts of Justice this week.