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Britain will slip further down the international league table of media freedom if measures to regulate newspapers are passed by MPs, a minister warned today.

Culture minister Margot James said: “UK’s current standing at 40th on the World Press Freedom index needs to be improved, not set back further.”

Her intervention came as the Commons prepared to vote on a proposal that would expose newspapers to paying the full costs of some court cases even if they are proved to have been in the right.

The idea was put to a vote by Labour deputy leader Tom Watson and backed by privacy campaigners reportedly funded by F1 racing tycoon Max Mosley. A second vote was called by former Labour leader Ed Miliband in a bid to force a new statutory inquiry into newspapers, their relationships with police officers and handling of data.

“These amendments would undermine the freedom of our newspapers,” tweeted Ms James, who said the new Data Protection Bill would strike a fair balance “between respecting press freedom and curbing excesses”. Former Guardian editor lan Rusbridger tweeted it would be “crazy to impose punitive costs on newspapers” in the way proposed by Mr Watson. But he said the arguments for a new Leveson inquiry were “harder to dismiss”.

Gerry McCann, whose daughter Madeleine was abducted in Portugal a decade ago, said it would be “a betrayal of the victims” of media intrusion not to hold the second part of the Leveson inquiry. He said he had no faith in the independent newspaper regulator Ipso, telling Radio 4’s Today programme: “I wouldn’t even talk to them.”

Theresa May told Cabinet yesterday it was “very important for the Government to resist amendments which could undermine our free press”.

The Prime Minister pointed out that almost £50 million of public money was spent investigating phone hacking, saying another inquiry would not be a “proportionate” solution to claims that had been investigated already.

Local newspaper editors say the Labour amendments could destroy regional journalism. The News Media Association described them as “draconian”.