Media playback is unsupported on your device Media caption Media boss Rupert Murdoch: "Who will show leadership in a time of turmoil?"

Media boss Rupert Murdoch has urged the government to "stay the political course" on deficit reduction.

In a speech in honour of Lady Thatcher, he said "toughness is necessary" and he was encouraged by Prime Minister David Cameron's response.

He repeatedly praised ex-Conservative PM Lady Thatcher, who is in hospital, saying she had "inspired the world".

It was billed as the chairman and chief executive of News International's first major UK speech since 1989.

'Tough fiscal line'

In his speech to the Centre for Policy Studies, a right-of-centre think tank, he set the challenges in modern Britain alongside those faced by Lady Thatcher in the 1980s .

Mr Murdoch said: "The new prime minister has come to office inheriting a daunting deficit. I am encouraged by his response. Many rightly applaud the coalition government for maintaining a tough fiscal line.

"We must be clear why this toughness is necessary.

ANALYSIS Rupert Murdoch is a libertarian - against too much state control, and in favour of individuals taking responsibility. Hence the high praise for Margaret Thatcher. The media boss's alliance with her stretches back to the 1980s. Mr Murdoch may not have firm party political leanings (remember he backed Labour under Tony Blair) but, as we see in this speech, he does have some strong views on the economy. No great shock then, that he is supporting the coalition's efforts to tackle the deficit. But, the debate over these cuts is hugely charged politically. News Corporation - via the Times, the Sunday Times, the Sun, the News of the World and Sky News - has a big stake in the UK's media. So the timing of this intervention is interesting.

"It is not a numbers game. It is about livelihoods and eventually rebuilding opportunities and greatness.

"Strong medicine is bitter and difficult to swallow. But unless you stay the political course, you will be neither robust nor popular. So, like the lady, the coalition must not be for turning.

"The financial crisis was a shock to the system. While the effects linger, it must not be used as an excuse by governments to roll back economic freedom."

Mr Cameron and Deputy Prime Minister Nick Clegg have been defending the Spending Review against accusations that its planned cuts were "unfair", after the respected Institute for Fiscal Studies think-tank said poorer families with children would be the "biggest losers".

Lady Thatcher, who turned 85 last week, is still in hospital where she has been treated for an infection.

Mr Murdoch was one of her most high-profile supporters during her period in office, which lasted from 1979 to 1990.

He praised the peer and quoted her repeatedly in his speech.

He praised her role, and that of former US President Ronald Reagan, in the lifting of the Iron Curtain, saying they had "changed the world" and he praised her "formidable economic achievements".

He also noted she had been willing to "court unpopularity" adding: "A free society also requires a government with backbone."

'Belief in freedom'

Mr Murdoch, whose News Corporation owns the Times, the Sun and Sky News, among other media outlets, also said a free society needed an independent press, adding it would "serve the interests of the powerful if professional journalists were muted, or replaced as navigators in our society by bloggers and bloviators".

He closed the speech saying Lady Thatcher was a "source of inspiration" adding: "Her philosophy is that of the ardent pragmatist - a pragmatist in the true sense, someone who believes in the basic decency and innate ability of people.

"She has a firm belief in freedom and of the responsibilities incumbent with that freedom."

It is understood Lady Thatcher has not fully recovered from an illness which prevented her attending Downing St last week to mark her 85th birthday.

Her son Sir Mark Thatcher said she was "chirpy" and in "good order" and had been talking about the Spending Review, announced by the government on Wednesday.