Detectives from Operation Weeting, the Metropolitan police investigation into mobile interceptions by News International, are understood to have raided an address in west London on Thursday.
Wallis was taken for questioning at a local police station on suspicion of conspiring to intercept communications, a Scotland Yard spokesman said.
He is the ninth arrest Scotland Yard has made since the fresh investigation into phone hacking was launched in January.
A Scotland Yard statement confirmed the arrest was carried out at 6.30am. "The man is currently in custody at a west London police station," the Met said. "It would be inappropriate to discuss any further details at this time."
Wallis joined the News of the World from the People in 2003 as deputy to then editor Andy Coulson. In mid-2007 he became executive editor and left the News International title in 2009. He is now a senior consultant at PR firm Outside Organisation.
Coulson and former NoW royal editor Clive Goodman, who was jailed in January 2007 for intercepting the voicemail messages of members of the royal household, were arrested and bailed on Friday as part of Operation Weeting and Operation Elveden, the separate Scotland Yard investigation into alleged illegal payments to police officers.
Coulson resigned as NoW editor in January 2007 after Goodman was jailed, saying he accepted responsibility. He has always maintained that he was unaware of phone hacking at the paper.
On the same day a 63-year-old man, who has not been named, was arrested and bailed as part of the phone hacking and police payments investigations.
The others arrested and bailed as part of Operation Weeting are Laura Elston, Press Association's royal correspondent, freelance journalist Terenia Taras, senior News of the World journalists James Weatherup and Neville Thurlbeck, and former NoW assistant editor (news) Ian Edmondson.
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