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British politicians said Monday they had reached a deal on a tough new system of newspaper self-regulation to rein in the excesses of the press revealed in the News of the World phone-hacking scandal.
Political leaders said the deal, finally struck at 2:30 am after months of negotiations, addressed the abuses laid bare in last year's Leveson Inquiry while protecting freedom of the press.
The issue had split the governing coalition, with Conservative Prime Minister David Cameron rejecting plans for a new press law advocated by his Liberal Democrat coalition partners and the opposition Labour Party.
Both sides claimed victory on Monday, with Cameron saying he had saved newspapers from potential censorship, but Labour leader Ed Miliband insisting the new system would be protected in statute from meddling politicians.
Victims of phone-hacking welcomed the deal as a way to ensure individuals had more power against Britain's voracious media.
However, Miliband said newspapers had "nothing to fear", after the owners of the Daily Mail, The Sun and The Daily Telegraph warned they may boycott the new regulator if it was written into law.
Cameron was due to unveil the deal to parliament later on Monday, detailing the establishment of a new, independent press watchdog with the power to investigate complaints, impose fines and ensure apologies are prominent and timely.
Newspaper editors will have a say but not a veto on appointments to the watchdog, officials said, while media groups that refuse to sign up to the new system will be subject to exemplary damages in any libel cases.
The changes are being introduced in the wake of the scandal at Rupert Murdoch's News of the World, which illegally accessed the voicemails of celebrities, politicians and victims of crime, including missing 13-year-old Milly Dowler, who was later found murdered.
Cameron subsequently commissioned the Leveson Inquiry in July 2011, which reported last year that newspapers "wreaked havoc with the lives of innocent people" and recommended a complete overhaul of their system of self-regulation.
Months of talks between the Conservatives, the Lib Dems and Labour broke down last week, and Cameron proposed to put his own plans to a parliamentary vote on Monday.
The deadline sent the parties back to the negotiating table at the weekend and they finally reached a deal early on Monday -- although both sides disagreed on what exactly it represents.
Labour and the Lib Dems wanted statutory regulation as recommended by the Leveson report, but Cameron warned that this would pose an unacceptable risk to press freedom.
The compromise would see a new press watchdog created under a royal charter, a special document used to establish organisations such as the Bank of England and the BBC.
The charter will be protected by a separate law which, while making no mention of the press, will state that all charters can only be modified by a two-thirds majority that House of Commons.
Cameron said he was "delighted" with the outcome.
"I've always wanted two things and that is a strong regulator to stand up for the victims, and we have got that, and also a proper defence of press freedom, and we have got that," he said.
Hacked Off, the campaign group representing victims of phone-hacking, said the proposals were "second best" to a full press law but would help prevent a repeat of the scandal.
The new system "will protect the freedom of the press and at the same time, protect the public from the kind of abuses that made the Leveson Inquiry necessary", said Brian Cathcart, one of the group's founders.
However, free speech campaigners Index on Censorship warned that Monday's deal spelled a "sad day for press freedom in the UK".
Chief executive Kirsty Hughes said the notion of a royal charter "undermines the fundamental principle that the press holds politicians to account".
Newspapers had yet to respond to the proposals, although many warned in Monday's editions that a new press law would open the door to censorship.
The Sun tabloid, which is owned by Murdoch, published a photograph of Winston Churchill on its front page with the headline "D-Day" and quotes from the wartime leader highlighting the importance of a free press.
But Labour's Miliband insisted: "I think a free press has nothing to fear from what has been agreed.
"This is about a press that doesn't abuse its own power and, if that power is abused, victims have a right to redress."