A far-reaching inquiry into British newspapers called for a new independent watchdog enshrined in law to regulate the press, to prevent a repeat of the excesses that led to a phone hacking scandal at Rupert Murdoch's News of the World tabloid.

The recommendation on Thursday meant Prime Minister David Cameron faced angering either senior figures in his party and Britain's newspapers or his coalition partners and the public.

The inquiry called for a radical overhaul of how Britain's notoriously aggressive press should be governed.

"I do not think that either the victims or the public would accept the outcome if the industry did not grasp this opportunity," wrote Lord Justice Brian Leveson, whose report ran to almost 2,000 pages.

While acknowledging Britain's newspapers did much good, he was scathing about some of their behavior and how they had ignored complaints and "wreaked havoc with the lives of innocent people".

This had been most keenly demonstrated by journalists at Murdoch's now defunct News of the World, a News Corp tabloid, who hacked the phone messages of missing schoolgirl Milly Dowler, who was later found murdered.

Leveson said there should be a new independent self-regulatory body, which crucially would be recognized in law, something the press and many within Cameron's own party, including senior ministers, have adamantly opposed as an erosion of centuries-old press freedoms.

"Despite what is said about these recommendations by those who oppose them, this is not and cannot be characterized as, statutory regulation of the press," he said.

"It would enshrine, for the first time, a legal duty on the government to protect the freedom of the press."

"The ball moves back into the politicians' court: they must now decide who guards the guardians," Leveson told a news conference.

The report leaves Cameron, who was embarrassed when toe-curling details of his cozy texts to one of Murdoch's lieutenants emerged at the inquiry, in a no-win situation.

He will either have accept to the report's findings in full, which will anger a hostile press and members of his own party, or reject them and risk dividing his coalition government as the junior Liberal Democrat partners support some form of legislation.

He will also be conscious of the weight of expectation from a public that was scandalized to learn that journalists hacked the phones of victims of crime, wined, dined and paid police for leads and were in constant touch with senior politicians.

Cameron was scheduled to give his response to the House of Commons shortly, under scrutiny from high-profile figures such as Hollywood actor Hugh Grant who have campaigned for a clampdown on an industry they say ruins lives.

Nick Clegg, the leader of the junior Liberal Democrat partners in the coalition government, will deliver his own statement to parliament after Cameron, implying that the two disagree on the way forward.

Leveson also said that politicians had become too close to newspaper executives in the last 30 years, and warned that the close ties formed between the government and Murdoch's News Corp over the aborted takeover of BSkyB was concerning and had the potential to jeopardize the $12 billion bid.

He said there was no credible evidence of bias on the part of senior minister Jeremy Hunt in his handling of the BSkyB takeover, but said the close ties allowed a perception of favoritism.

Reuters?