An Australian inquiry sparked by concerns about journalistic practices at Rupert Murdoch's News Corp on Friday recommended a new government-funded body to set and enforce standards across the country's tightly owned media.

Murdoch's local arm News Ltd immediately rejected the recommendation for a News Media Council which could force media to uphold journalistic ethics and issue an apology, correction or retraction, or grant a person right of reply.

The inquiry was launched following Murdoch's News of the World phone hacking scandal in Britain and after criticism by some politicians of biased coverage by Murdoch newspapers of the Australia government.

Australian media is among the world's most concentrated, with Murdoch's News Ltd controlling some 70 percent of its newspaper ownership. Murdoch's main newspaper rival in Australia is the Fairfax Media Group .

The independent report, released by the government, called for a News Media Council to set media standards and handle complaints made by the public.

The establishment of a council is not about increasing the power of government or about imposing some form of censorship, the report said.

It is about making the news media more accountable to those covered in the news, and to the public generally.

News Ltd Chief Executive Kim Williams rejected the proposal.

The spectre of a government-funded overseer of a free press in an open and forward-looking democracy like ours cannot be justified, Williams said in a statement.

If print and online media are to continue to be able to robustly question, challenge and keep governments in check, they must remain self-regulated entirely independent of government.

Australia's media can often be robust, particularly its tabloid newspapers, but their behaviour can seem meek compared to their British counterparts.

The report concluded that current media regulations were not sufficient to achieve the degree of accountability desirable in a democracy.

It recommended that the new body cover news and current affairs coverage on all forms of media, replacing the Australian Press council which only handles complaints against print media.

The News Media Council should have power to require a news media outlet to publish an apology, correction or retraction, or afford a person a right to reply. This is in line with the ideals contained in existing ethical codes but in practice often difficult to obtain, said the report.

Communications Minister Stephen Conroy said the government would consider the recommendations as part of a wider review into media convergence and ownership rules.

(Writing by Michael Perry; Reporting by Maggie LuYueYang; Editing by Jonathan Thatcher)