Ministers are considering moves to control escalating legal costs which have made fighting libel cases "out of the question" for most regional papers, Media Lawyer reports.
At last month's Society of Editors conference in Bristol, Daily Mail editor Paul Dacre said that even wealthy papers such as his nowadays thought "long and hard" before contesting libel actions.
He told delegates: "For the provincial and local press, such actions are now out of the question. Instead they stump up some cash to settle as quickly as possible to avoid court actions which, if they were to lose, could close them."
Now Mr Dacre's concerns have been echoed by MPs in a parliamentary debate on so-called 'libel tourism' – wealthy foreigners suing for defamation under UK law.
Justice minister Bridget Prentice said the Government would be consulting on so-called "no win, no fee" conditional fee arrangements and would also be seeking views on defamation on the internet.
She told MPs: "On conditional fee agreements, what has been said about the opportunity of people with very little means is very important, and we are therefore very keen to ensure that continues.
"We also of course realise that we are concerned about the disproportionate cost of defamation proceedings and we are considering whether there are additional measures that might be necessary to control the cost of defamation proceedings and we will be consulting on that shortly."
Ms Prentice was responding to concerns raised by MPs that the libel laws are being used to stifle journalistic expression and freedoms.
Rotherham MP Denis MacShane, a member of the National Union of Journalists, highlighted the practice where lawyers can take libel cases under CFA deals whereby they are compensated for the risk of failure by being able to charge the losing side an uplift of up to 100pc - meaning they can charge double their usual fees.
The system was designed to help the less well-off but is now being used by the rich and famous, critics say.
Mr MacShane also attacked "libel tourism", condemning it as an "international scandal", and said the Reynolds defence should be enshrined in statute.
The defence is used in defamation cases against newspapers when they can demonstrate a genuine public interest and responsible journalism.
He said: "We need stronger journalism and judges who defend the public's right to know, not the lawyer's right to use the law to maximise his profit on behalf of causes that are not worthy of consideration by British courts."