Sir David is said to believe that the press's attempt at self-regulation through the voluntary Press Complaints Commission set up two years ago is not working.
The sources also say Sir David's report, to be published at the end of the month, will recommend legislation on privacy and trespass, aimed in particular at eliminating electronic eavesdropping.
Before the complaints commission was set up to replace the discredited Press Council, David Mellor, then the Home Office minister reponsible for the media, warned the press that it was drinking at the 'last-chance saloon' if it wanted to avoid government intervention to curb excesses by the media.
The commission, in its submission to Sir David last autumn, argued that it had enforced a shake-up of newspapers up and down the country, that readers' complaints were being settled swiftly in most cases, that its new simplified code of conduct had cleared away the fog and the system was working well.
However, the recent uninhibited coverage of royal marriage difficulties has raised new doubts about self-regulation, and the Palace has asked for more protection.
The Government, under pressure from MPs across the political spectrum, is no longer inclined to oppose statutory controls.
There have also been parliamentary hearings at which the way victims of crime have been treated by the press 'pack' aroused sympathy among MPs.
It is thought that the attacks on the Major government by Rupert Murdoch's News International newspapers have played a part, and hardened government thinking.
The issue of how David Mellor's own sex life was reported has also weighed in the balance.
Complaints commission sources said yesterday they viewed the forthcoming report with trepidation. Regulating the press - and the thorny issue of how far its freedom should be compromised, if at all, by legislation - now looks set to become the key media issue for 1993. This is particularly likely since the government-inspired debate about the future of the BBC appears to have virtually collapsed into apathy before it has properly begun.
Two Commons committees are taking evidence on press conduct. One is the group of MPs from various parties brought together by the Labour MP Clive Soley, whose private member's Bill on accurate reporting and right of reply has received much support.
The second inquiry, by the Heritage Select Committee, has been hearing evidence from people with complaints of media intrusion. Newspaper editors who have appeared before the committee say privately they have been surprised by the degree of hostility they have met.
There is every sign that January is going to see a regrouping of lobby interests: the problem for the newspaper industry is that it is notoriously divided, with many people working in the regional press loathing the conduct of certain national newspapers.Reuse content