LONDON: A major inquiry called Thursday for new laws to underpin a tougher watchdog for Britain's “outrageous” newspapers in a verdict that sets up Prime Minister David Cameron for a bruising political battle.

Senior judge Brian Leveson, who led an eight-month inquiry sparked by the phone-hacking scandal at Rupert Murdoch's News of the World tabloid, said there should be an independent self-regulatory body backed by legislation.

But Cameron said he had “serious concerns and misgivings” about any statutory change, setting him at odds with not only his junior coalition partners the Liberal Democrats, but also the Labour opposition and many hacking victims.

Lord Justice Leveson said in his report that the British newspaper industry had for decades “wreaked havoc with the lives of innocent people” and “acted as if its own code, which it wrote, simply did not exist.”

He said that while the press served the country “very well for the vast majority of the time”, its behaviour “at times, can only be described as outrageous.”

The prime minister set up the Leveson Inquiry in July 2011 in the wake of revelations that the News of the World had hacked the voicemails of murdered schoolgirl Milly Dowler as well as dozens of public figures.

Murdoch was forced to shut down the 168-year-old newspaper over the scandal.

Victims of phone hacking and press harassment welcomed the inquiry's findings and called on Cameron to implement them in full.

But Cameron told parliament that while he backed the creation of a new newspaper regulator, he feared that bringing in new laws risked curbing the freedom of the British press.

“I have some serious concerns and misgivings on this recommendation,” he said.

“We will have crossed the rubicon of writing elements of press regulation into the law of the land... we should think very, very carefully before crossing this line.”

Liberal Democrat Deputy Prime Minister Nick Clegg was due to take the unusual step of making a separate statement after Cameron's, underscoring deep divisions in the coalition that took office in May 2010.

Opposition Labour leader Ed Miliband said Leveson's proposals, which are now likely to go to a vote in the House of Commons, or lower chamber of parliament, should be implemented and done so by 2015.

“No more last chance saloons,” he said, referring to repeated warnings over the last two decades that the British press had had enough warnings.

“On behalf of every decent British citizen who wants protection for people like the Dowlers who wants a truly free press, a press that can expose abuse of power without abusing its own: we must act,” Miliband said.

Parliament will debate Leveson's recommendations next Monday.

The British press, already suffering huge losses of readers and advertisers, currently regulates itself through the Press Complaints Commission, a body staffed by editors. Its critics say it is toothless.

Leveson said in his report that a new watchdog would have independent members, except for one editor. It would have the power to fine offenders up to #1 million ($1.6 million, 1.23 million euros) and to order the publication of apologies and corrections.

Those powers would be backed by new laws, he said. He summed up his plans as “independent regulation of the press organised by the press, with a statutory verification process”.

Leveson also criticised the relationship between the press, police and politicians, which he said was “too close”. Contacts between them should be recorded, he said.

Hacked Off, a victims' campaign group featuring Hollywood star Hugh Grant, said the inquiry's proposals were “reasonable and proportionate”.

Over eight months of hearings, the Leveson Inquiry heard from victims of press intrusion including actors and celebrities, as well as politicians, journalists, police and newspaper executives.

Their testimony revealed embarrassing text messages from Cameron to Murdoch newspaper executive Rebekah Brooks, left a minister fighting for his career, and shone a light on the sometimes murky workings of the British establishment.

Police have arrested dozens of people under three linked probes into alleged crimes by newspapers.

Brooks, the former head of Murdoch's British newspaper wing News International, and Cameron's former spokesman Andy Coulson both appeared in court Thursday on bribery charges, just hours ahead of the report's publication.