Prime Minister David Cameron has pulled the plug on cross-party talks on a new system of regulation for the press.
Mr Cameron will now call a vote in the House of Commons on Monday on Conservative proposals for a Royal Charter to underpin the new system.
Both Labour and Liberal Democrats voiced dismay at the breakdown of discussions designed to establish cross-party consensus on the sensitive proposals in the Leveson report into phone hacking. It is unclear whether Deputy Prime Minister Nick Clegg will tell his MPs to vote with Labour to defeat the Tory proposals.
In a hastily arranged press conference in 10 Downing Street, Mr Cameron announced that the cross-party talks had "concluded without agreement" after a conference call between himself, Mr Clegg and Labour leader Ed Miliband.
He said that the proposals for an independent body, established by Royal Charter, to oversee the system of press self-regulation would provide "the toughest regulation of the press that this country has ever seen".
Newspapers would refuse to sign up to a new system which is underpinned by statute, as recommended by Lord Justice Leveson and advocated by Labour, Lib Dems and the Hacked Off campaign group, he warned.
"The route I have set out is the fastest possible way to deliver the strong self-regulation body that Leveson proposed that can put in place million-pound fines, prominent apologies and get justice for victims in this country," said the Prime Minister. "The deal is there to be done, it is the fastest way to get proper justice for victims."
A senior Labour source said: "The Prime Minister's decision is very disappointing. We still hope for an agreement. We still believe there can be an agreement. We urge the Prime Minister to reflect on his actions."
A senior Lib Dem source said Mr Cameron had made the decision to pull the plug on cross-party talks "unilaterally" and the Lib Dems were now considering their next step. "We were very surprised and disappointed," said the source. "We thought we were making real progress and inching towards a deal, but the Prime Minister has unilaterally decided to pull the plug on cross-party talks. We are still prepared to work with politicians of all parties, including the Conservatives, who want to work with others to implement Leveson." Asked whether Lib Dems would vote with Labour against the Royal Charter proposals on Monday, the source said: "We are going to have to talk about it and see what we do. Nothing has been agreed in Government."
Mr Cameron said other parties would have the opportunity to table their own amendments to the Bill ahead of Monday's vote. "To put it simply, they can back my amendments and support this Royal Charter and secure a workable new system that delivers the principles of Leveson's recommendations or they can grandstand and end up with a system that I believe will not work," he said. "The only way we can help victims is through a system that actually works in practice."