Lord Justice Leveson has blamed the press for "wreaking havoc with the lives of innocent people" as he called for politicians to legislate to underpin a "genuinely independent and effective system of self-regulation" for newspapers.
In a damning report released on Thursday, he said the press had ignored its own code of conduct and showed a "recklessness in prioritising sensational stories".
He insisted that such a move was not "statutory regulation of the press", but called for a new "independent process to recognise the new self-regulatory body and reassure the public that the basic requirements of independence and effectiveness were met".
Leveson insisted: "This is not, and cannot, reasonably or fairly, be characterised as statutory regulation of the press."
In a stark threat, Leveson also warned that turning Ofcom into a "backstop" regulator was an option if the industry refused to co-operate with his scheme.
The suggestions - in a hugely-detailed 2,000-page report that also heavily criticised politicians for becoming too cosy with the media - leave David Cameron with a major headache as he seeks to forge cross-party consensus.
He said politicians of all parties had developed "too close a relationship with the press in a way which has not been in the public interest".
Politicians will be required to publish all the meetings they have with senior members of the press, in the new recommendations.
Leveson made direct criticism of Rupert Murdoch's News Corporation for their lack of interest in the law-breaking of the News of The World, until it hit the headlines, saying: "most responsible corporate entities would be appalled that employees were or could be involved in the commission of crime in order to further their business.
"Not so at the News of the World."
In a statement summing up his inquiry at the Queen Elizabeth II conference hall, Leveson said victims were "not just the famous but ordinary members of the public, caught up in events, many of them truly tragic, far larger than they could cope with but made much, much worse by press behaviour that, at times, can only be described as outrageous."
He said that he realised his proposals could be rejected by the press.
"In the light of all that has been said, I must recognise the possibility that the industry could fail to rise to this challenge and be unable or unwilling to establish a system of independent regulation that meets the criteria.
"I have made it clear that I firmly believe it to be in the best interests of the public and the industry that it should indeed accept the challenge.
"What is more, given the public entitlement to some accountability of the press, I do not think that either the victims or the public would accept the outcome if the industry did not grasp this opportunity."
He suggested that, "in that regrettable event", Ofcom could be "required to act as a backstop regulator for those not prepared to join such a scheme".
"It would be a great pity if last-ditch resistance to the case for a measure of genuine independence in oversight of standards or behaviour by the press, or the intransigence of a few, resulted in the imposition of a system which everyone in the industry has said they do not want, and which, in all probability, very few others would actually want to see in place."