The former director of the Press Complaints Commission has conceded the watchdog took a "restrictive and timorous" approach when faced with the possibility of questioning Andy Coulson over phone hacking after his resignation from the News of the World.
Tim Toulmin, who was in the post when the now-defunct tabloid's royal editor Clive Goodman and private investigator Glenn Mulcaire were jailed for the practice, said he "accepted some time ago" that the PCC could have called Coulson to shed light on illegal activity at the Sunday paper.
But he said at the time the watchdog's powers would not have had any "traction" with the former editor.
Giving evidence to the Leveson Inquiry into press standards, he also expressed "regret" that some people who may have suffered at the hands of the press had never heard of the PCC.
Coulson stepped down from his role after Goodman and Mulcaire were imprisoned for intercepting voicemail messages on royal aides' phones in 2007.
In the wake of the scandal, he spoke of his deep regrets for what happened and took "ultimate responsibility" for it.
The PCC considered questioning him at the time but it concluded Coulson would not have felt obliged to comply with such a request, Toulmin told the inquiry.
"I said to Parliament that I think that was a mistake and at least the PCC should have been seen to ask him, even if he said, 'no, I'm not helping you'," Toulmin added.
Lord Justice Leveson, chairman of the inquiry, replied: "That would have been truly powerful, wouldn't it?"
"Yes," Toulmin said.
Asked whether the watchdog could be accused of taking a "restrictive and timorous" approach, Toulmin replied: "Absolutely. No, I accepted that some time ago and obviously, as I have said, that was the decision that the PCC made at the time."
PCC 'not a formal regulator'
Lord Justice Leveson went on to question whether the PCC was a regulator "at all".
A number of witnesses have criticised the PCC, saying the embattled organisation does not have enough powers to be effective.
Lord Justice Leveson said: "Do you think the truth is that the error everyone has made is that in calling the PCC a self-regulating body, it's believed that it's a regulator when it isn't actually a regulator at all?"
"Yes," Toulmin replied.
Outlining some of his issues with the organisation, the former director said: "One of the things that used to strike and upset me, in a way, was hearing from members of the public who had a perfectly reasonable complaint to make or we could have helped in some way, stopping harassment or helping them with difficulties, and they had never heard of the PCC and I think that was a matter of regret."
Toulmin, who was employed by the PCC for 13 years and directed the organisation between 2004 and 2005, told the hearing the watchdog did not claim to be a "formal regulator" but was more of an "ombudsman".
"I think it's a complaints body," he added. "It's an industry coming together to create a complaints scheme really, I think, and so I don't think it's a regulator, no."
PCC does 'very, very good' work
Citing the benefits of the PCC, Toulmin said the organisation was "flexible" and offered complainants a "quick system" to resolve issues.
He said the body was "motivated by helping the public remedy problems" while keeping the "importance" of press freedom at its heart.
Its members were not people who would be "cowed" by editors, he told the inquiry.
And he denied suggestions that Daily Mail editor Paul Dacre and Les Hinton, News International's former executive chairman, exerted any kind of "tripartite" influence over complaints when they sat on the PCC board along with the watchdog's former chairman Sir Christopher Meyer.
Stressing the importance of preserving the "very, very good" work of the PCC, he acknowledged the watchdog never tried to "get to the bottom" of phone hacking because of the limitations placed upon it.
And he accepted the watchdog had made a "major" mistake when it decided not to pursue a series of explosive allegations made by The Guardian in 2009 which related to the illegal interception of messages.
"I think the PCC would maintain it never tried to get to the bottom of the issues because it couldn't and I think actually what we have been talking about today, in terms of 2009, shows in very sharp relief the limitations it was under," he told the inquiry.
Looking ahead, he suggested the media could be offered a chance to develop regulation but added: "If not, then it might be able to come up with a simple bit of legislation."
In further proposals, he said the future could lie in a standards body, separate from an organisation which deals with complaints.
22,000 complaints over Jan Moir article
Director of the PCC, Stephen Abell, who took over from Toulmin, said the watchdog had been besieged with complaints following the publication of a piece by columnist Jan Moir in the Daily Mail relating to the death of singer Stephen Gately.
The article, which was originally headlined "Why there was nothing 'natural' about Stephen Gately's death", sparked outrage and resulted in the PCC's website collapsing after it became the subject of "Frybombing" - when actor Stephen Fry encouraged his millions of Twitter followers to take a stand, the inquiry heard.
There were some 22,000 complaints over the piece which led to claims of homophobia.
While it was a "difficult" point to rule on, Abell said the PCC reached a consensus and decided the article fell "just short" of a breach.
But he said the watchdog was not equipped to handle cases such as phone hacking.
"I think the PCC doesn't have a clearly defined mechanism to explore this type of systematic issue with the News of the World," he told the inquiry.
Future of regulation
Questioned on the future of press regulation, Abell told Lord Justice Leveson the media could be asked to operate within a contractual framework.
But he warned if the press failed to come up with an adequate system, state intervention would be inevitable.
"The bottom line with all of this is that if major players aren't willing to be part of a system then ... even though it creates huge difficulties, something more impositional from the state will take place," he said.
The proposed "contractual model" would create a "more solid, more explicit and more enforceable" set of parameters within which the press could operate, he told the hearing.
A possible way to resolve disputes could be through a "two-pronged" system with one arm addressing complaints quickly and efficiently and the other designed to investigate broader breaches and potentially impose financial penalties, he said.
But he warned of the pitfalls of attempting to create a system which required all news and media outlets to sign up.
Such "universality" was not achievable, he said.