The Press regulator’s reliance on funding from controversial sports tycoon Max Mosley undermines its independence and should render it ineligible for formal recognition, the High Court has heard.

The Press Recognition Panel (PRP), set up under royal charter after the Leveson inquiry into press behaviour, granted recognition to Impress last October to act as a the regulator of newspaper standards.

But the News Media Association, which represents publishers, on Thursday challenged that decision on the basis that the PRP misinterpreted and misapplied the charter.

It argues that Impress’ dependence on nearly £1 million a year from a donor such as Mr Mosley, the former Formula 1 boss who sued the News of the World for damages over its account of his “orgy” with prostitutes, leaves it open to influence from anti-press campaigners.

Mr Mosley, son of the notorious British fascist leader Oswald Mosley, has campaigned for stronger privacy laws since his 2008 victory against the now defunct Sunday newspaper over its decision to print photos of him at a sex party.

The NMA is now asking Lady Justice Rafferty and Mr Justice Popplewell to declare that Impress fails to meet the recognition criteria set out in the charter.