The independent Media Inquiry commissioned last year by the federal government has proposed the creation of a national watchdog that would keep watch on the conduct of all media outlets in Australia - print, broadcast and online.

According to Inquiry chair Ray Finkelstein, establishing a state media eye that will be funded by the national government would hopefully improve the media profession's professional and ethical practices.

With a state regulator that would be empowered to bring erring media firms to courts, journalists are expected to perform "their roles skilfully and diligently," Finkelstein said.

The new state body, should it materialise, would be called the News Media Council and would draw a yearly budget of $2 million from Canberra, the inquiry report said, which Communications Minister Stephen released on Friday.

Senator Conroy's office had indicated that the Finkelstein report was submitted to him Wednesday.

"News Media Council should have power to require a news media outlet to publish an apology, correction or retraction, or afford a person a right to reply," the review panel recommended on its report.

That tool would be exercised via court-enhanced power of the media council, Finkelstein said, which effectively would separate it from the existing authority of the Australian Press Council (APC), presently the industry-funded body that hears and handles media-related issues.

The media review noted that the APC was largely ineffective in addressing problems that involve media conducts and stressed "there must be some effective means of raising standards of journalism and of making the media publicly accountable."

"What the media have lost sight of is that they accepted the idea of press regulation by having set up the APC to make a positive contribution to the development of journalistic standards," the report added.

With the creation of the media council, which will be duly backed by federal legislation, the report looks forward to speedy resolution of complaints and issues that would be brought against specific media practitioners.

Apart from superseding the functions of APC, the News Media Council will assume regulatory responsibility of the Australian Communications and Media Authority (ACMA), which currently keeps a watchful eye on Australia's broadcast industry.

Online news sites will also be targeted for regulation in the new super body, the panel report said, but websites with over 15,000 hits a year will be the first to attract regulatory attention, which include personal blogging sites that deal with Australian affairs.

The industry immediately raised concerns on the broad powers that will be enjoyed by the media regulator, with News Ltd chief executive Kim Williams cautioning that "the spectre of a government-funded overseer of a free press in an open and forward-looking democracy like ours cannot be justified."

"There is no role for government to be involved in regulation that adjudicates on whether or not reporting is fair and balanced," Williams told The Herald Sun on Friday.

"If print and online media are to continue to be able to robustly question, challenge and keep governments in check, they must remain self-regulated entirely independent of government," the News Ltd boss said.

Also, opposition communications spokesman Malcolm Turnbull warned that the proposed statutory media regulation would only replicate the presumably effective self-regulatory practices of the local media industry.

Turnbull noted too that while the review highlighted valid concerns, the idea of a wider scope of regulation to hang over the media industry might not be a necessary measure at all.

"If the unregulated part of the media is more balanced than the regulated part, why do you conclude that more regulation is the answer," Turnbull was quoted as saying by The Australian.

Prime Minister Julia Gillard launched the inquiry last year in the immediate aftermath of the hacking scandal that led to the closure of the century-old 'News of the World', a London-based tabloid ran by Rupert Murdoch's News Ltd.