Tory peer Lord Hunt of Wirral told the Culture, Media and Sport Committee that he was working with newspaper editors on a plan for the revamped body.
The new watchdog would enforce most of Lord Justice Leveson’s recommendations stemming from his inquiry into press ethics, but without the need for legislation to underpin it.
He put forward proposals for a system of press self-regulation that would require newspapers to sign contracts, thus giving a watchdog binding powers without the need for a press law.
“The contract model would be right at the heart of the new body. I cannot understand how the new body would have the power to fine and investigate unless members had signed up to it,” he said.
Lord Hunt also indicated that candidates for the watchdog’s new board would be announced on Friday. His comments come after talks between industry bosses and David Cameron.