Instead the press will get another chance to strengthen self-regulation through the Press Complaints Commission (PCC).

Newspapers have welcomed the decision, but some lawyers said they were disappointed, blaming the government for "rolling over".

Earlier this year, the government proposed rendering it a crime to make or receive such payments to witnesses for their stories, after a number of incidents involving high-profile trials.

Payments to witnesses taint the fairness of a trial

Christopher Sallon QC

But the plans were criticised by the PCC and newspaper editors as ill thought-out, unworkable and ineffective.

Now the government says the PCC and other regulators will be given the chance to toughen up their own codes - but if they do not, the law will be changed.

The Lord Chancellor said he wanted to see the tough new system in place by the end of the year.

'Too much competition'

There are fears that where witnesses are offered money during the trial, they exaggerate their evidence to make it more interesting - or hold evidence back to give newspapers an exclusive later on.

I don't think [self-regulation] is going to succeed, because competition amongst newspapers is ferocious these days for stories

Magnus Linklater, former Scotsman editor

Even if they tell the truth, their credibility may be damaged and juries may disbelieve them.

Barrister Christopher Sallon QC told BBC Two's Newsnight he believed it was important to halt such payments, but thought the government had backed off for fear of angering the press.

"It's very unusual for this government to roll over in that way. I believe they really don't want a confrontation with the press...payments to witnesses taint the fairness of a trial."

Magnus Linklater, former editor of the Scotsman, doubted whether tougher self-regulation would work, "because competition amongst newspapers is ferocious these days for stories".

'Sometimes beneficial'

The issue was thrown into light by several recent cases.

Witnesses in the Amy Gehring case were offered payments

One was the trial of schoolteacher Amy Gehring - acquitted of indecently assaulting under-age pupils - during which teenagers were offered money for their side of the story after they had given evidence.

Another was the trial of Gary Glitter three years ago, in which defence lawyers cast doubt on evidence because witnesses had been promised payments by the media.

Richard Stott, former editor of the Daily Mirror, told Newsnight that in most cases there was no evidence that witness payments had distorted justice.

He added that a cash payment could sometimes be beneficial - saying Jeffrey Archer had only been brought to justice because a witness was offered money by a newspaper.

Rules rewritten

The government wants the PCC's rules rewritten to make an "absolute ban" on payments to witnesses in active criminal cases.

Editors can currently claim that a payment was in the public interest - for example, that cash was offered by an investigative journalist to help expose wrongdoing.

The government also wants it to be "unacceptable in all circumstances" to offer payments which were conditional on whether a defendant was found guilty or acquitted.

The PCC and the Society of Editors both welcomed the government's climbdown, saying the industry was also determined to "protect the administration of justice" - and that voluntary codes were the best way of ensuring that.