Tom Watson hailed a Government climbdown on plans to curtail freedom of information laws and turned the tables by demanding ministers reveal the cost to taxpayers of the setting up the commission.

Watson, Labour’s deputy leader, claimed victory after the cross-party panel concluded the FOI act is “working well” and ruled out bringing charges for requests.

“This is a remarkable government climbdown in the face of sustained opposition from Labour, the SNP, the Liberal Democrats, and the media.

“We believe the Act should be extended to cover private sector companies that win public sector contracts and we will continue to make that case. Our cross-party report will continue and recommend improvements to the Act.”

Watson also called on the Tories to publish the cost of running the FOI commission “which has decided after many weeks of expensive deliberations to maintain the status quo”. He added, pointedly, “if the cost is not disclosed we will submit an FOI request that his department will no doubt process speedily.”

Watson condemned the Government when the review was announced, arguing that transparency was key to building public trust in politicians. Jack Straw, the former Foreign Secretary who served on the commission, was criticised by some Labour members for joining the panel.

Today the panel’s report rejected the proposals from the Government that FOI requests should be paid for or that minister should have a greater ability to veto responses to requests.

It says the Act has “enhanced openness and transparency”. It argues that the rights provided by the act should be extended in some places, echoing Labour’s policy proposals.

It argues for a 20- day limit for responding to requests and confirms there should be no charge for them. It also suggests that the scope of FOI requests should cover private companies operating under a contract from government.

There is, however, one area that continues to trouble campaigners. The commission recommended the scrapping of first tier tribunals – in which an appeal would be heard if an FOI request had been denied – meaning they can only be heard on points of law rather than on the justification of a “outweighing” public interest.

Tony Blair described his decision to introduce the Act as “foolish” in his memoirs because of worries it could undermine the internal workings of government.