An expert panel set up by the Scottish Government proposed a tougher regime than measures outlined at Westminster or plans set out by Lord Justice Leveson in his report on press ethics last year.
It provoked a shocked response from Labour and Conservative MSPs, who warned First Minister Alex Salmond not to use the findings to threaten the press in the run-up to next year's independence referendum.
Facing a growing backlash from MSPs and the newspaper industry, the Scottish Government last night stressed it would continue consensus at Holyrood – and with the industry – over a future regulatory regime.
It comes as Prime Minister David Cameron and his deputy Nick Clegg unveiled rival plans for a new system of press regulation in England and Wales, with the sticking point remaining whether a new self-regulatory body should be backed by law.
North of the Border, Lord McCluskey, the former solicitor general, who led an expert panel following Leveson's recommendations, said that papers and news websites in Scotland should come under compulsory regulation by a new independent body, with no chance to opt out as envisaged by Lord Leveson.
Social media, including Twitter, should also be considered as coming under the same regulation as papers and news websites.
The new regulator could continue to be a UK-wide body, similar to the existing Press Complaints Commission, and following Lord Justice Leveson's plan should be able to fine papers up to £1 million for abuses such as phone hacking.
But controversially, it would be licensed to operate in Scotland by a "Recognition Commissioner" appointed by Scottish Government ministers. If the Recognition Commissioner ruled the regulator was failing to uphold standards he or she could close it down, allowing ministers to create their own press watchdog.
The plan differed from varying schemes outlined at Westminster, which would see a regulatory body established by Royal Charter.
Mr Salmond described the report as an "important contribution" and said: "We will now take the time to consider all of their suggestions in full and discuss the proposals with the other political parties and other stakeholders."
He added: "The report is admirably clear. It is for the Parliaments in London and in Scotland to establish a recognition process. It is for the press to bring forward a voluntary regulatory body compliant with Leveson principles. I hope that this is still possible.
"The Scottish Government indicated at the time of Leveson's report that we wanted to implement his key proposals of a voluntary, self-regulatory system set up by the press with statutory underpinning."
But in a warning to the First Minister, Scots Labour leader Johann Lamont said: "Leveson is about addressing the rights of victims and protecting the public. It should not be used by politicians as an attempt to control the press.
"We agreed with the First Minister that this group should look solely at the technicalities of implementing Leveson in Scots Law. We did not agree to the Leveson recommendations being re-written or built upon."
Scots Tory leader Ruth Davidson, a former BBC journalist, said: "This is a shameless attempt by the First Minister to shackle a free press at a time of the utmost political sensitivity.
"This is not statutory underpinning but statutory control which would give Scotland some of the most draconian press controls in the western world."
The expert panel included David Sinclair, director of communications at Victim Support Scotland, professors Neil Walker and Peter Watson, legal academics respectively from Edinburgh and Strathclyde universities, and journalist Ruth Wishart.
The Scottish Newspaper Society, which represents the industry, said in a statement: "The Scottish Newspaper Society is in favour of UK-wide, non-statutory regulation and is opposed to a Scotland-only solution, which we believe will be a costly burden on many small publishers who are already facing economic hardship."
At Monday's crunch vote in the House of Commons, the SNP could hold the balance of power on press reforms in the rest of the UK. Yesterday, in an unprecedented move, Labour and the Liberal Democrats outlined their joint plan to enshrine a new system of self-regulation in law.
That move is opposed by David Cameron who insists it would be a threat to press freedom. The hung Westminster Parliament means the smaller parties, such as the SNP or Plaid Cymru, could swing the vote either way.