The Indian government has condemned the phenomenon of "paid news", in which newspapers and broadcasters accept money to run favourable articles about politicians, companies and celebrities.

Broadcasting minister Ambika Soni said the practice was affecting the credibility of news reports and undermining the media's claims to be upholding democracy.

Her intervention follows last summer's report by the Press Council of India that revealed widespread payments for positive coverage, especially in the run-up to elections.

The report described paid news as "a complex phenomenon" that "ranges from accepting gifts on various occasions, foreign and domestic junkets, various monetary and non-monetary benefits, besides direct payment of money."

It also involved "private treaties", involving share transfers between media and non-media companies "in lieu of advertisement space and favourable coverage."

Many politicians paid papers to run sympathetic stories about them during the 2009 elections, and the report lists several examples.

With all that in mind, a Sunday Times reporter contacted Medianet, a company suspected of offering "paid news" deals. It was created by Bennett, Coleman and Co, which publishes many titles including The Times of India.

Last week, the reporter telephoned Medianet, as it reveals today, posing as the PR agent of a company wanting coverage for a party at an exclusive shopping mall in Delhi.

The Medianet executive said space could be bought in the Delhi Times supplement, The Times of India's society pages, for £27 a centimetre on the front page, or £16 inside.

This could be dressed up as a genuine news story, as long as it met a "celebrity quotient". Celebrities were available to attend the event at an extra cost, he said.

He later confirmed that a recent Times article about the launch of a range of ballpoint pens had been paid for by a marketing company.

The story quotes Ravi Dhariwal, the chief executive of The Times of India, as saying: "There is no paid news in any of our main papers and titles. We do have advertising and promotional supplements which sometimes carry paid features."

Sources: Sunday Times/The Hindu/Press Council of India