Newspaper and magazine publishers are applying to the High Court for judicial review of the Privy Council's decision to reject their proposals for a new royal charter to govern the regulation of the press.
The legal challenge will raise doubts over whether ministers can go ahead with plans to ask the Queen at a Privy Council meeting next week to approve a rival royal charter, which is backed by all three major political parties but bitterly opposed by much of the industry.
The Queen has already been urged by a group of international press freedom bodies not to sign the charter, and industry sources said the Privy Council should now reconsider its plans to press ahead with approval at the October 30 meeting.
Meanwhile, final plans were published for the establishment of a new Independent Press Standards Organisation (Ipso) to replace the Press Complaints Commission as the industry's watchdog.
The industry group which has drawn up the plans said Ipso could begin work early in the New Year and provide the tough, independent and effective regulator which Sir Brian Leveson called for in last year's report on media ethics and practices.
The application for judicial review asks the High Court to quash the October 8 decision by a committee of the Privy Council, made up of Government ministers, not to grant the industry charter.
The Press Standards Board of Finance (PressBof), the industry body which funds the regulatory system, argues that the application was not dealt with fairly, that the Government and Privy Council failed to consult with the press and that the procedures used were "irrational".
PressBof chairman Lord Black of Brentwood said: "The decision by the Government and the Privy Council on this matter has enormous ramifications for free speech both here in the UK, and - because of our leadership role in the Commonwealth and developing world - across the globe.
"The Government and the Privy Council should have applied the most rigorous standards of consultation and examination of the royal charter proposed by the industry, which would have enshrined tough regulatory standards at the same time as protecting press freedom. They singularly failed to do so, and that is why - as the issues at stake are so extraordinarily high - we are having to take this course of action."
The rival royal charters are similar in many respects. Both would create a "recognition panel" to oversee an independent self-regulatory body with powers to impose fines of up to £1 million on newspapers for wrongdoing.
However, while the press charter would require industry-wide approval for any amendments, the politicians' version could be changed by a two-thirds majority in Parliament, sparking fears within the industry that future governments could seek to encroach upon media freedom.
It is thought that some newspaper publishers may follow the lead of The Spectator magazine, which has said it will not sign up to any regulator which is endorsed by a recognition panel set up under the Government charter.
More than 80 pages of legal documents underpinning the establishment of Ipso were released by the Industry Implementation Group on a new website, www.ipso.co.uk, following extensive consultations involving lawyers and editors from hundreds of publications.
Paul Vickers, chairman of the Industry Implementation Group and executive director of Trinity Mirror plc, said: "Today's publication is the result of almost nine months of work and consultation across our large and diverse industry. As a result of this painstaking and thorough exercise, we can now move to establish the tough, independent, effective regulator that Lord Justice Leveson called for in his report.
"I am very grateful to many colleagues in the industry - both legal and editorial - who have completed such a mammoth task.
"I am confident that what we have produced will be the toughest regulator anywhere in the developed world - one which will guarantee the public the protection it deserves, but which will also ensure we maintain the free press on which our democracy is founded."
The plans, to which a majority of publishers have indicated they are committed, are contained in a series of documents including:
:: A contract which will bind publishers to Ipso and give the regulator tough powers of investigation, enforcement and sanction;
::The regulations under which Ipso will operate, investigate complaints and undertake standards investigations;
:: The Articles of Association which will set out the governance of the regulator and guarantee its independence;
:: The financial sanctions guidance under which Ipso will be able to impose fines of up to £1 million; and
:: The Articles of Association of a new Regulatory Funding Company setting out transparently how Ipso will be funded.
Bob Satchwell, the executive director of the Society of Editors said: "The new regulatory system will be the toughest in the Western world. It will deliver the solutions that Lord Justice Leveson recommended. The new body will give the public a clear path to air their complaints while at the same time protecting the freedom of the press that is essential in our democracy.
"The Leveson Inquiry was set up to look at the culture and practices of the press. The revelations bore no resemblance to the behaviour of most newspapers and their journalists. UK newspapers produce millions of stories a year, most of which raise no calls for complaint. The new body will allow them to continue serving their readers while at the same time ensuring that complaints are dealt with fairly and quickly."
Professor Brian Cathcart, executive director of Hacked Off said: "The people leading this part of the newspaper industry are exposing themselves as desperate and deaf.
"Desperate, because they are now resorting to a legal challenge to something based on the findings of a public inquiry, and backed by the victims of press abuse, all parties in Parliament and the overwhelming majority of the public.
"Deaf, because they refuse to listen to the evidence that there is no threat to the free press and that this deal actually benefits the press, both financially and in terms of freedom of expression.
"Their actions, coming in the last few days before the cross-party charter is sealed, are entirely predictable and self-serving.
"It's time they calmed down, listened, and did what the public expects of them."