Plans on how to regulate the British press industry have been delayed until later this month after a difficult meeting of the key players rejected the regulatory plans proposed by the industry but also could not agree whether to back the royal charter passed by parliament.

The privy council is due to meet tomorrow and will reject the industry version of the charter.

Campaigners for victims of press intrusion believed the meeting of the privy council would then seal the royal charter proposed by parliament at the same meeting.

However, it is understood prime minister David Cameron dug in his heels and told his Liberal Democrat partners that it would be better to delay a decision until later in the month.

Sources suggested that a special privy council would be held on October 30th, coincidentally at the time when the phone-hacking trials are likely to have started.

Fraser Nelson, editor of the Spectator, said in a blog late last night: “We don’t need politicians’ permission to have a free press in Britain: it’s a sacred right we have enjoyed for more than three centuries.

“What the privy council is now proposing would be illegal in America, where freedom of speech is protected in the first amendment.”

Nick Clegg as well as the Labour party pressed Mr Cameron to accept the royal charter set out by parliament and all three main political parties, but the prime minister argued it was better to see if a compromise could still be reached in which the industry and the politicians could agree on the relatively narrow points of contention between them. Mr Clegg may express his frustration at the attitude of the media and the prime minister.

In practice, all decisions will be made by ministers to ensure that the privy council attended by the Queen does not become embroiled in political controversy.

A subcommittee of eight coalition ministers had been examining the industry’s favoured version of press regulation for months, but there is still little trust between government and the press – even though in theory their differences are small.

Brian Cathcart, executive director of Hacked Off, which campaigns for victims of press intrusion, said the industry plan had been a "delaying manoeuvre" by the big national newspapers.

“The problem with the papers is that they do not want to deal fairly with complaints,” he told the BBC Radio 4 Today programme.

Chris Blackhurst, group content editor of the Independent and its sister titles, told the programme that either charter would "cost all newspapers a lot more money".

“It’s well known that the newspaper industry is in trouble,” he added.

“Unfortunately, what’s happened is that all the positions are completely polarised and that’s also true of Hacked Off, it’s true of the politicians, it’s true of the press, and we are all in our trenches and we are all chucking grenades at each other and we are not really very far apart.”

Trevor Kavanagh, columnist on the Sun and confidant of Rupert Murdoch, said the development was a victory for those who wanted to suppress the British press.

“It has to be seen as a great victory for the forces of oppression of a free press, Hacked Off in particular and the politicians who have gone along for the ride,” he told Newsnight.

He said the "bizarre process" did not follow the recommendations of Lord Justice Leveson and that the industry had come up with a solution it believed ticked all the boxes and avoided "political input".

“The privy council is a political input,” Mr Kavanagh said. He believed the industry would carry on with its plans to develop a self-regulator but newspaper groups would have to consider the government decision before formally settling on the next steps.

One seasoned press executive described the mood: “Victims don’t trust the press, the press don’t trust the politicians or [campaign group] Hacked Off.

The whole thing needs to be de-escalated. Everyone is in such entrenched positions but everyone is on such a small plot of land. They are not on different battle lines, they are in small potholes on the same side. Agreement is so close yet so far.”

If the press charter is ultimately ruled out, there is a possibility that the main newspaper groups, including the owners of the Daily Mail, the Sun, the Telegraph and the regional newspaper groups, will launch their own breakaway body regardless.

The main newspaper groups will not be giving a formal reaction until they see the government announcement and the reasons why the press charter is being rejected. However they are unlikely to embrace the decision and the more vocal among them will paint it as a victory for Hacked Off.

Responding to reports that the press industry’s proposals had been rejected a spokesman for Hacked Off said:

“Victims of press abuse will be relieved to hear that, at long last, the obstacle placed in the way of the cross-party royal charter has been removed.”

Meanwhile, in a sign of the anger among victims of press harassment at the delays, Hacked Off has written to Lord Rothermere, proprietor of the Daily Mail and Mail on Sunday, urging him to look again at the need for an inquiry into his paper's practices.

The peer had previously rejected a call by the Labour leader, Ed Miliband, to mount such an inquiry in the wake of the row over the Daily Mail's hostile articles about his father, Ralph Miliband. On Monday night, David Cameron also endorsed Ed Miliband's decision to challenge the Daily Mail. The prime minister told Tom Bradby on ITV's The Agenda: "What was wrong was the headline, he clearly didn't hate Britain. Ed was right to come out."

Writing in the Guardian, Hugh Grant, the actor and Hacked Off director, said: "The big newspaper groups are very isolated now. They know that what they are resisting was recommended by the judge after a long and painstaking public inquiry.

"They know it is endorsed by all the leading victims of their abuses in recent years – people like the McCanns, Christopher Jefferies and the mother of Abigail Witchalls, whose evidence at the inquiry was so shocking. They know, too, that the charter has the backing of every party in parliament – a remarkable constitutional rarity."

Executives at the publisher of the Daily Mail did not respond to the Guardian seeking a response to the Hacked Off letter.

Guardian