Hugh Grant's media campaign group has made an attempt to hold David Cameron's Government hostage, threatening to derail legislation on economic reform until the Prime Minister regulates the press.
Hacked Off persuaded the cross-bench peer Lord Skidelsky to table an amendment to the Enterprise and Regulatory Reform (ERR) Bill – which is designed to cut red tape in business and promote economic growth – in order to compel the Government fully to implement Lord Justice Leveson's plan for a new press watchdog.
The Crime and Courts Bill will also be targeted with a similar amendment, The Independent understands.
Mr Cameron is due to meet the Deputy Prime Minister Nick Clegg and Labour leader Ed Miliband on Tuesday to discuss progress on implementing the Leveson report.
Next week is seen as vital in the political brokering over press reform, with the Tories convinced the report's recommendations can be introduced by Royal Charter alone and Labour demanding some element of statute.
A Leveson-based amendment to the Defamation Bill, introduced by the Labour peer Lord Puttnam, already threatens to wreck legislation to reform Britain's libel laws.
The ERR Bill is due to be discussed in the Lords on 18 March.
A Labour source said the party would accept a Royal Charter if it met Lord Justice Leveson's proposals and was supported by two elements of statute to ensure press abuses could be punished by exemplary damages and that future ministers could not amend the charter. "We hope to get an agreement through cross-party talks but, if we don't, there will be opportunities in Parliament which we will use."
The Conservatives are furious. "We are in difficult economic times and the last thing we need is the Labour Party constantly playing politics with regulation of the press and damaging important government Bills," said a party source. Labour pointed out tonight that Lord Skidelsky is a crossbencher, although Lord Puttnam does sit on the party's benches.
Freedom of speech campaigners and other critics of Lord Puttnam's amendment say it is illiberal, goes much further than Lord Justice Leveson intended and will lead to planned libel reform being shelved.
The Conservatives warned that the ERR Bill was in similar jeopardy of being sidelined with the Skidelsky amendment. Ministers believe they are close to gaining cross-party consent for a Royal Charter on press reform that would mean Lord Justice Leveson's report could be implemented without the need for statute. The amendments being introduced in the upper house were "unnecessary game-playing", said the Tories.
Brian Cathcart, executive director of Hacked Off, said the Royal Charter would be a betrayal of victims of press abuses, including those who gave evidence to the Leveson Inquiry. "The charter falls far short of a regulatory system that is sufficiently independent of the newspaper industry or the Government," he said.
"If the Government cannot abide by the recommendations of Lord Justice Leveson, the victims of press abuses believe that the will of Parliament should be heard. Hacked Off agrees it is prudent for the Lords to be ready with a plan for press self-regulation which complies with the independent recommendations of the judge."