Newspapers are considering their next move after the government published a royal charter aimed at underpinning self-regulation of the press.
An industry steering group said it did not address newspapers' fundamental objections about political involvement.
One newspaper source told the BBC there was a "realistic prospect" of the industry taking legal action after its own proposals were rejected.
The government said the charter would safeguard freedom of the press.
Independent self-regulation is being brought in after recommendations by the Leveson Inquiry.
The inquiry into press ethics and practices was set up amid public and political anger at the extent of phone hacking by journalists, first exposed when it emerged that the now-closed News of the World had accessed the voicemail messages of murdered teenager Milly Dowler.
Question processThe Industry Steering Group, which represents national, regional and local newspaper publishers, said the royal charter unveiled on Friday was not "voluntary or independent".
Getting politicians to agree is only part of the story.
It might even prove to be the easy bit.
Now they need the papers on board, and some of them will take a lot of convincing.
Sceptical titles have a trump card: they could just set up their own regulator by their own rules.
Get that running, think some, and the differences between one version of a Royal Charter and another will look pretty obscure.
So the culture secretary has got a lot of persuading to do.
Fail to get the press onside and the politicians could look pretty weak, and make some powerful enemies.
"This remains a charter written by politicians, imposed by politicians and controlled by politicians," the group said.
"It has not been approved by any of the newspapers or magazines it seeks to regulate."
But the group said it would look closely at changes agreed by the three main political parties at Westminster to try to make the charter more acceptable to the industry.
Many in the press are keen to get their own regulator set up as soon as possible.
'Battle not over'Daily Mail editor-in-chief Paul Dacre said the row between Ed Miliband and his newspaper over an article about the Labour leader's late father showed why politicians should not be involved in press regulation.
Mr Dacre also claimed the "hysteria" which followed Geoffrey Levy's article was "symptomatic of the post-Leveson age".
In an article published in the Guardian and in his own paper, he said: "Some have argued that last week's brouhaha shows the need for statutory press regulation. I would argue the opposite.
"The febrile heat, hatred, irrationality and prejudice provoked by last week's row reveals why politicians must not be allowed anywhere near press regulation."
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The Spectator Editor Fraser Nelson: The press being regulated by politicians is "like allowing the foxes to regulate the chicken coop"
Mr Dacre also suggested the Guardian and the Daily Mail shared common ground on press regulation despite their differences on other matters.
He said: "While the Mail does not agree with the Guardian over the stolen secret security files it published, I suggest that we can agree that the fury and recrimination the story is provoking reveals again why those who rule us - and who should be held to account by newspapers - cannot be allowed to sit in judgment on the press."
The Daily Mirror, in an editorial on Saturday, said the "dispute is essentially about the principle of politicians interfering in newspapers".
"The secretive Privy Council can slip out its charter - but this battle is not over," it said.
Final agreementMedia commentator Steve Hewlett said the threat of external regulation had caused newspapers to moderate their behaviour.
He said: "In the post-Leveson world newspapers are minding their Ps and Qs in a way which they weren't necessarily doing beforehand.
"The risk is that in the long term the press becomes less brave, less rumbustious and arguably less free."
Cross-party political agreement on regulation comes after months of wrangling since Sir Brian Leveson published his report.
Culture Secretary Maria Miller said that the deal would safeguard the freedom of the press and the future of local newspapers.
Shadow Culture Secretary Harriet Harman urged newspapers to "try out" the proposed system because there was nothing to fear.
She said: "The last thing we want is to have a situation that there is in some countries where politicians control the press, we're strong supporters of a free press.
"But it's quite ironic because a system that's quite like this operates in Ireland and our UK press for their Irish editions - they sign up to it and it hasn't caused any problems of politicians controlling the press."
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Brian Cathcart from Hacked off: "With these further concessions there can be no argument from the press that they should not participate in this"
The all-party draft proposals include plans for:
- A small charge for arbitration for people seeking redress from newspapers - as an alternative to expensive libel courts
- An opt-out for local and regional newspapers
- More involvement in decision making for the press and media industry
Labour called on the newspaper industry to "engage" with the new system and said there must be "no press boycott", but one magazine - the Spectator - immediately rejected the all-party plan.
The culture secretary said the draft charter included "some really important changes" in an attempt to appease the press, but said there would be no movement on how the system could be amended.
The all-party charter states that changes to regulation could be made only with a two-thirds majority in Parliament.
Hacked Off, which campaigns on behalf of victims of press intrusion, said changes to the draft proposals meant there was no reason for the press to refuse to back the charter.
The proposals will be put to the Privy Council for final agreement on 30 October.
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