“We need a system of tough, independent self-regulation that will deliver for victims,” he told parliament.

Cameron warned that regulation of Britain’s famously unruly press must “actually deliver” for victims of media intrusion, rather than being simply “an exercise in grandstanding”.

The new body will be able to force newspapers to issue upfront apologies for inaccurate or intrusive stories, Cameron said, as well as offering a free arbitration system for victims.

Newspapers that refuse to sign up for the voluntary system could face extremely high “exemplary” damages in court cases.

A statement issued by the Daily Mail Group, Telegraph Media Group and News International - publishers of and newspapers - said they needed “time to study” before responding to the “deeply contentious issues” contained within the plan.

The Guardian, which uncovered much of the hacking scandal, said the statement “suggests that many powerful players are still calculating whether to play ball.

“The political class as a whole could discover that the brokering has only just begun,” it cautioned on Tuesday.

Political leaders said the deal, finally struck at 2.30am (local time) on Monday after months of negotiations, addressed the abuses laid bare last year’s Leveson Inquiry into media ethics, without bringing an end to more than three centuries of press freedom in Britain.

However, the accused MPs of “crossing the Rubicon”.

“Last night, parliament decided that 318 years was long enough to let newspapers and magazines remain beyond its influence,” said its editorial.

said the deal set “a dangerous precedent” and called Monday “a bleak episode in the story of freedom of the press in Britain”.

Murdoch tabloid The Sun ran with front-page headline “Ministry of Truth”, recalling the totalitarian society imagined by George Orwell in novel 1984.

Cameron set up the inquiry in the wake of revelations that Rupert Murdoch’s News of the World tabloid illegally accessed the voicemail messages of a murdered schoolgirl as well as dozens of public figures.

Over eight months of hearings, Judge Brian Leveson heard testimony from dozens of victims of press intrusion, including actor Hugh Grant and Harry Potter author J.K Rowling, as well as politicians, journalists and newspaper executives.

Leveson concluded in his final report that British newspapers had “wreaked havoc with the lives of innocent people” and recommended a complete overhaul of their system of self-regulation, backed by a new law.

The governing coalition had been split over how to implement Leveson’s recommendations, with Conservative leader Cameron rejecting plans for a new press law advocated by his Liberal Democrat coalition partners and the opposition Labour Party.

The compromise reached early on Monday will see a new press watchdog created under a royal charter, a special document used to establish organisations such as the Bank of England and the BBC.

The charter will be protected by a separate law which, while making no mention of the press, will state that all charters passed after March 1, this year can only be modified by a two-thirds parliamentary majority.

Both sides claimed victory on Monday, with Cameron saying he had saved newspapers from potential censorship, and Labour leader Ed Miliband saying the new system would be protected in statute from meddling politicians.

Cameron insisted the new charter did not amount to a law regulating the press.

“It’s wrong to create a vehicle whereby politicians could more easily in the future impose obligations on the press,” he told lawmakers.

Hacked Off, the campaign group representing victims of media intrusion, said the proposals were “second best” to a full press law but would help prevent a repeat of the scandal.

But free speech campaigners Index on Censorship warned that Monday’s deal spelled a “sad day for press freedom in the UK”.