Jeremy Hunt has confirmed that he plans to give News Corporation's BSkyB takeover the green light, after nearly four months of negotiations between the culture secretary, Rupert Murdoch's media company and regulators over spinning off Sky News.

The culture secretary said on Thursday that News Corp's proposal for Sky News to be spun-off from Sky into an independent listed company should go ahead to allay plurality fears.

Hunt added that since he gave the News Corp/Sky deal the provisional go ahead in March, a "more robust set of undertakings" had been agreed for the Sky News spin-off.

These extra undertakings will now be put out to further consultation, with a deadline of midday on Friday 8 July for interested parties to make submissions to Hunt.

The extra measures include having an independent director with senior journalism expertise present at Sky News board meetings where decisions on editorial matters are taken and a requirement for Sky to continue to cross-promote the 24 hour news service on its channels.

The other extra undertakings agreed during protracted negotiations between Hunt, News Corp, the Office of Fair Trading and Ofcom are for the appointment of a monitoring trustee whose main role is to ensure that News Corp complies with the undertakings in the run up to spin-off, and a requirement for Sky News' articles of association to be approved by the culture secretary.

"I have considered carefully the points raised and, as at all steps in this process, taken advice from the independent regulators. The regulators have confirmed that the proposed undertakings are still sufficient to ensure media plurality," Hunt said.

"I could have decided to accept the original undertakings but a number of suggestions were made in response to the consultation which could further strengthen the undertakings, particularly around editorial independence, business viability and the articles of association. I am therefore proposing some changes to the undertakings and I will now hold a further public consultation."

Hunt's clearance fires the starting gun on negotiations with investors in Sky who are pushing for almost £4bn more than the £7.8bn originally offered by News Corp a year ago. The company originally tabled a 700p a share offer when Sky's share price was under 600p.

Since then a continuing strong financial performance – thanks in part to reaping the benefits of investment in areas including high-definition and broadband – and market speculation that Murdoch will be willing to significantly up his bid has seen the company's share price rocket. Sky's share price was 848p at the close of the market on Wednesday.

The Department for Culture, Media and Sport said it had received more than 40,000 submissions for its consultation on the News Corp/Sky deal, "including a very large number of near-identical responses as a result of internet campaigns".

Hunt also met representatives of rival media companies Trinity Mirror, Guardian Media Group – which publishes the Guardian – Telegraph Media Group and Daily Mail publisher Associated News and Media.

These media groups came together in an informal alliance last autumn to oppose the News Corp/Sky takeover, arguing it would stifle media plurality by bringing together the UK's largest newspaper group, Sun and Times owner News International with a 37% share of the national market, and the largest broadcaster, BSkyB.

Hunt also met with law firm Slaughter and May and Avaaz, the campaigning group that has opposed the deal.Hunt gave provisional clearance for the merger in March on the condition that News Corp agreed to spin-off Sky News into a separate company and limit its shareholding in the channel to 39.1%.

Initially Hunt said that he would give his final decision by the end of April, following a consultation period.

However Ofcom and the Office of Fair Trading, who have been advising Hunt, took longer than anticipated in hammering out a water-tight legal agreement to make sure that Murdoch cannot "get around" clauses designed to ensure Sky News remains independent.

Critics of the proposed News Corp/BSkyB deal argue that he has successfully been able to work around previous legal agreements designed to secure the editor's independence when the Times was acquired in 1981 and when the Wall Street Journal was bought in 2007.

Investors including Crispin Odey, founder of Odey Asset Management, which has a 2.7% stake in Sky, and Fidelity are pushing for a price as high as £11 a share. On that basis News Corp would have to find well over £11bn, although the company has already made it clear it does not intend to overpay.

There has been speculation that a deal could be reached at about 875p – costing News Corp about £1.8bn more than the original £7.5bn proposal.

Under an agreement struck between the two sides when News Corp made its first approach to Sky last June, they will now have five months to reach a deal or Murdoch will have to pay the satellite broadcaster £38.5m.

In the first two months of negotiations following Hunt's approval News Corp needs to get an offer recommended by Sky's independent directors. Over the next three month period any offer must be subject to a minimum acceptance of 70% of Sky's shareholders.

If a deal is not struck after five months then News Corp stumps up the £38.5m fee and is able to seek a deal requiring just 50.1% shareholder approval. As Murdoch controls just over 39% that means winning over investors controlling 11% of stock. "News Corporation's leverage over BSkyB gets better over time," said one City source.