LORD Justice Leveson said the press had caused "real hardship" to members of the public as it chased stories.
He recommended a new independent press watchdog, underpinned by legislation, but insisted that such a measure did not amount to state control of the press.
He said that "press freedom in Britain, hard won over 300 years ago" should not be jeopardised.
But he said that any system of self-regulation amounted to "the industry marking its own homework", and so a new system of independent regulation was vital.
Speaking in Westminster, Lord Justice Leveson stressed that a free press "is one of the true safeguards of our democracy".
He added: "I remain firmly of the belief that the British press – I repeat, all of it – serves the country very well for the vast majority of the time."
He said the press should decide how the new watchdog should work, with a legal framework "to support press freedom, provide stability and guarantee for the public that this new body is independent and effective. This is not, and cannot reasonably or fairly be characterised as statutory regulation of the press."
In his 1,987-page report he suggests an independent regulator with the power to fine newspapers up to £1m (€1.24m), or 1pc of turnover, for breaching a new code of standards, and says it should be up to the media to agree the form and powers of the new watchdog.
The new body, he says, should have an arbitration system to enable wronged parties to seek swift redress by way of a prominent apology and fines, if appropriate.
The arbitration system would also help newspapers avoid costly libel action, he suggests, because litigants who refused to accept this "cheap route to justice" could be deprived of large damages or court costs if they took the matter to trial. (© Daily Telegraph, London)