Newspapers have warned the appointment of a new press regulator could force them into signing up to a state-backed system of regulation that could jeopardise the independence of journalism.

The Press Recognition Panel, set up under a Royal Charter after the Leveson Inquiry, gave its backing to Impress.

It is supported by former Formula One boss Max Mosley, who had a dispute with the News Of The World over articles about his private life.

But most national newspapers have instead signed up to the voluntary Independent Press Standards Organisation (Ipso).

Culture Secretary Karen Bradley is considering whether to activate new rules under Section 40 of the Crime and Courts Act 2013. This would mean any newspaper that refused to sign up to the new regulator could have to pay the legal fees of a complainant who sued them for libel, win or lose.

Impress’s appointment was one of two triggers required to implement the Section 40 costs sanctions.

Henry Faure Walker, chief executive officer of Newsquest Media Group, has written to Ms Bradley warning it would have “devastating consequences” for local and regional newspapers and “for the principle of press freedom in our democratic society”.

Mr Faure Walker, writing on behalf of the group – the second largest publisher of regional newspapers in the UK – and its editors, said it had “grave concern” that Ms Bradley could impose the costs sanction.

He added: “We have no doubt the consequences of doing so will be devastating for the local press and for the principle of press freedom in our democratic society.

“It is no secret the purpose of Section 40 is to force the press into a state- ordained system of compulsory regulation.

"It is designed to do this by taking away from publishers who do not sign up to that system their right in law to recover their costs in libel, privacy and other media cases in the courts.”

Bob Satchwell, executive director of the Society of Editors, said the decision was “irrelevant” to the reality of press regulation, adding that the vast majority of the press and significant publishers reject the Royal Charter system under which the PRP was set up.

Dr Evan Harris, of Hacked Off, which campaigns for an accountable press, said the Impress decision would give the UK its “first regulator to have proven its independence and effectiveness.”