Prime Minister David Cameron echoed concerns about government interference, expressing misgivings about a key recommendation of the report — that the new regulator be enshrined in law. He called on the much criticized press to show it could control itself by implementing the judge's proposals quickly — and without political involvement.
"I'm proud of the fact that we've managed to survive hundreds of years without state regulation," he said.
Lord Justice Brian Leveson issued his 2,000-page report at the end of a media ethics inquiry triggered by a scandal over tabloid phone hacking that expanded to engulf senior figures in politics, the police and Rupert Murdoch's media empire.
His key recommendation was to create a new print media regulator, which he said should be established in law to prevent more people being hurt by "outrageous" press behaviour that had "wreaked havoc with the lives of innocent people whose rights and liberties have been disdained."
Cameron, under intense pressure from both sides of an issue that has divided his own Conservative Party, welcomed Leveson's proposal for a new regulator and said "the status quo is not an option."
But he said that asking legislators to enshrine it in law meant "crossing the Rubicon of writing elements of press regulation into the law of the land."
"I believe that we should be wary of any legislation that has the potential to infringe free speech and a free press," Cameron told lawmakers in the House of Commons. "In this House which has been a bulwark of democracy for centuries, we should think very, very carefully before crossing this line."
Leveson insisted that politicians and the government should play no role in regulating the press, which should be done by a new body with much stronger powers than the current Press Complaints Commission.
But the judge said it was "essential that there should be legislation to underpin the independent self-regulatory system."
He said the new body should be composed of members of the public including former journalists and academics — but no more than one serving editor, and no politicians. It should have the power to rule on complaints, demand prominent corrections in newspapers and to levy fines of up to 1 million pounds ($1.6 million), though it would have no power to prevent material being published.
Membership would be voluntary, but newspapers would be encouraged to join in part to stave off expensive lawsuits — the regulator would handle complaints that currently end up in court.
The proposal is similar to the system operating in Ireland, where a press council and ombudsman were set up in 2008 to make the print media more publicly accountable.
Critics of the tabloid press generally backed Leveson's findings.
"I welcome Lord Leveson's report and hope it will mark the start of a new era for our press in which it treats those in the news responsibly, with care and consideration," said Kate McCann, who was the subject of intense press interest after her 3-year-old daughter Madeleine disappeared during a holiday in Portugal in 2007.
Brian Cathcart of the group Hacked Off, which campaigns for victims of press intrusion, said Leveson had produced "a workable, proportionate and reasonable solution to the problems of press abuse."
He said Cameron's "failure to accept the full recommendations of the report is unfortunate and regrettable."
Cameron set up the Leveson inquiry after revelations of illegal eavesdropping by Rupert Murdoch's now-defunct News of the World tabloid sparked a criminal investigation and a wave of public revulsion.
The furor erupted in 2011 when it was revealed that the News of the World had eavesdropped on the mobile phone voicemails of slain schoolgirl Milly Dowler while police were searching for the 13-year-old.
Murdoch shut down the 168-year-old newspaper in July 2011. His U.K. newspaper company, News International, has paid millions in damages to dozens of hacking victims, and faces dozens more lawsuits from celebrities, politicians, athletes and crime victims whose voicemails were hacked in the paper's quest for scoops.
News International chief executive Tom Mockridge said the company was "keen to play our full part, with others in our industry, in creating a new body that commands the confidence of the public."
"We believe that this can be achieved without statutory regulation — and welcome the prime minister's rejection of that proposal."
Leveson's 4 million pound ($6.4 million) inquiry heard evidence from more than 300 witnesses during months of hearings that provided a dramatic, sometimes comic and often poignant window on the workings of the media. Witnesses ranged from celebrities such as Harry Potter author J.K. Rowling and Hugh Grant — who both complained of intrusive treatment — to the parents of Dowler, who described how learning that their daughter's voicemail had been accessed had given them false hope that she was alive.
Leveson said that the ongoing criminal investigation constrained him from accusing other newspapers of illegal behaviour, but concluded there was a subculture of unethical behaviour "within some parts of some titles."
While many editors have denied knowing about phone hacking, Leveson said it "was far more than a covert, secret activity, known to nobody save one or two practitioners of the 'dark arts.'"
He said newspapers had been guilty of "recklessness in prioritizing sensational stories almost irrespective of the harm the stories may cause."
"In each case, the impact has been real and, in some cases, devastating," the judge said.
The hacking scandal has rocked Britain's press, political and police establishments, who were revealed to enjoy an often cozy relationship in which drinks, dinners and sometimes money were traded for influence and information.
Several senior police officers resigned over the failure aggressively to pursue an investigation of phone hacking at the News of the World in 2007. But Leveson said that "the inquiry has not unearthed extensive evidence of police corruption."
Leveson said over the past three decades, political parties "have had or developed too close a relationship with the press in a way which has not been in the public interest."
Those relationships reached right up to the prime minister's door. Former Murdoch editors and journalists charged with phone hacking, police bribery or other wrongdoing include Cameron's former spokesman, Andy Coulson, and ex-News of the World editor Rebekah Brooks, a friend of the prime minister.
Leveson acquitted senior politicians of wrongdoing, but recommended that political parties publish statements "setting out, for the public, an explanation of the approach they propose to take as a matter of party policy in conducting relationships with the press."
Cameron, who is tainted by his own ties to prominent figures in the scandal, said he accepted that proposal.
But politicians remained far apart on the broader issue of how, or whether, to regulate the press.
Cameron was holding talks Thursday with leaders of the other main parties in an attempt to thrash out agreement.
He faced a battle. Deputy Prime Minister Nick Clegg, leader of junior government partner the Liberal Democrats, differed from Cameron in backing the call for a new regulator established in law.
"We owe it to the victims of these scandals, who have already waited too long for us to do the right thing," he said.
Analysts say that it was possible for the coalition government's two parties to join forces and push through a version of the recommended legal changes.
But Steven Barnett, a communications professor at the University of Westminster, said that if that does not happen, he would not trust the British press to set up a truly independent regulator.
"One possibility is that in the end (the report) has no effect whatsoever," Barnett said. "The press can make some noises about regulating themselves. But in the end they will want to control themselves in ways that Leveson himself said was unacceptable."
Jill Lawless can be reached at http://Twitter.com/JillLawless