Lib Dem peer Lord Lester QC has warned that "party political gamesmanship" could lead to the long-awaited Defamation Bill being abandoned.
On 5 February Labour Peers put forward an Opposition amendment to the Bill at its second Lords reading that had a Leveson law tagged on to it.
This was passed by 272 votes to 141 and provides for the introduction of a low-cost libel arbitration service as part of a new press regulator overseen by the Lord Chief Justice.
The move was widely condemned by press freedom campaigners, not least because it says journalists must consult the new regulator in advance of publication if they want to avoid the risk of exemplary damages at future trials.
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Libel reform campaigner Lord Lester, who drafted an earlier Bill that the current legislation is partly based on, describes the amendment as a "draconian version" of Sir Brian Leveson's proposals.
Writing in The Sun, Lester said: "Free speech in this country is in grave danger of being stifled by party political gamesmanship. The threat comes from politicians who have hijacked an attempt to reform our out-of-date, repressive libel law by clogging the Defamation Bill with wrecking amendments."
The Bill is due leave the Lords next week and return to the Commons, and the Government is going to attempt a last ditch bid to have the rebel amendment removed on Monday at the third reading stage in the Lords.
If the large majority in favour of the amendment cannot be overturned, the Government may well drop the bill from the schedule rather than risk a Commons defeat.
One crossbench Peer told the Daily Mail: "Third Readings are for tidying up Bills – not reopening the whole debate. And even if all the Lib Dems who voted for Puttnam came across the Government would still lose. Both procedure and voting arithmetic are against them."
Talking about the various benefits of the Defamation Bill, Lester writes in The Sun: "The Bill creates a Serious Harm Test to prevent frivolous claims. It makes user-friendly the defences of honest opinion, truth and qualified privilege, and introduces an important public interest defence. It creates rules for the internet and abolishes the presumption of a trial by jury in libel cases.
"Judges are working to modernise court procedures so libel claims are decided quickly, with a level playing field for the rich and not-so-rich. It is a charter not for the press but for the public, for whom the press is public watchdog."
"It is essential for the political parties and the press to agree what needs to be done to give effect to Leveson’s recommendations. But if they cannot, I fear the Prime Minister will kill the Defamation Bill. That would be a huge mistake – burning the house to roast the pig. It would waste the best chance in 100 years to reform our libel law."
Last week press owners, via their Industry Implementation Group, said they welcome the Conservative proposal for a Royal Charter to underpin a new system of press self-regulation.
Press owners last met at the beginning of January and agreed then to the setting up of a press regulator which was fully Leveson-compliant. According to PCC chairman Lord Hunt, the only sticking point for the industry is creation of a low-cost libel arbitration arm.
Both Lord Hunt and the Industry Implementation Group have indicated to Press Gazette that all other aspects of the Leveson plan – including a conscience clause in journalists' contracts, a properly independent appointments procedure and the removal of serving editors from the complaints-handling body – will be in the composition of the new regulator.
But the industry has now maintained a public silence about the progress of the creation of its new regulator for six weeks.
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