Former BBC chairman Lord Grade has hit out at the "bonkers" cross-party royal charter system of press regulation, arguing that it is a "dangerous step too far" towards political interference.
He said leading lawyers had questioned the legality of the "carrot and stick" system, where newspapers who sign up to a regulator recognised under the royal charter system will be spared the threat of exemplary damages, claiming it could breach human rights laws.
The Tory peer said the process of deciding how to react to the Leveson Report had been "comprehensively hijacked" by pressure group Hacked Off and under the system newspapers would find themselves more at risk of parliamentary interference than the licence-fee funded BBC.
In a speech to the Society of Editors Lord Grade acknowledged that the press had "brought this situation on itself" as a result of the bad behaviour of some in the trade.
"It certainly does at times seem as if tabloid journalists leave their humanity and their conscience at home when they head for the newsroom," he said.
"You do wonder how some of them sleep at night."
But he added: "The trouble is, that as soon as the politicians became involved, they did what politicians always do: they reached for the statute book - always the wrong answer where press regulation is concerned."
He said "so eager were our elected representatives to show just how deeply they shared the public's outrage, that they handed what looked like a veto on it to the unelected representatives of Hacked Off" during the process of drawing up the charter.
"That final session, where politicians of three main parties huddled in secret over pizza with Hacked Off to agree the final draft of the royal charter, while the industry directly affected was unrepresented - that session was, to say the very least, counter-productive".
The charter, sealed by the Queen following a meeting with Government ministers in the Privy Council, "is a dangerous step too far", Lord Grade warned.
"It enshrines the principle that Parliament has the right - however remotely - to intervene in the regulation of the press. And that to me is a red line."
He said Parliament debates, but does not vote, on the BBC's licence fee settlement, which helps protect the corporation's editorial freedom.
But "as things now stand, Parliament will have more right to interfere in the editorial freedom of the press than it does in the editorial freedom of the BBC".
"Bonkers, or what?"
Lord Grade said he had sought advice on the legality of the exemplary damages provision from leading lawyer Lord Pannick QC.
Lord Pannick's view was that it breached Article 10 of the European Convention on Human Rights, which protects freedom of expression.
"So there you have it," Lord Grade said. "The protection from exemplary damages supposedly offered by the royal charter may well turn out not to be a nice carrot but rather more a dead parrot."
Lord Grade, a member of the Press Complaints Commission (PCC), said the industry's new regulator was proof that the newspapers had accepted the need for things to "change drastically".
The Independent Press Standards Organisation (Ipso) was a "valuable leap forward from the limited remit of the PCC", he said.
Culture Secretary Maria Miller had made "encouraging noises suggesting that the royal charter could be rendered redundant" if Ipso proved successful, Lord Grade said.
"Now there are those who say the charter is already redundant - an invitation to a party no-one is going to attend. But let's not look a gift horse in the mouth.
"Let's really get behind Ipso and get it up and running as soon as possible. Let's keep our minds open and let's be prepared to tighten things up if experience shows it's necessary.
"Above all, let's do our damnedest to restore public confidence."
He added: "We must always remember that the public interest is served, yes by newspapers behaving responsibly and ethically and within the law, but also in the end by being free from outside influence, especially that of the state."
A Department for Culture, Media and Sport spokeswoman said: "Both the industry and the Government agree independent self-regulation of the press is the way forward and that a royal charter is the best framework.
"Recognition will allow newspapers to take advantage of valuable legal incentives that have been provided but, of course, the choice to sign up lies with the industry.
"The royal charter does not make any changes at all to the way in which the press investigates stories or publishes them. It protects freedom of the press whilst offering real redress when mistakes are made. Importantly, it is the best way of resisting full statutory regulation that others have tried to impose."