Labour Lords have introduced a new amendment to the Defamation Bill aimed at restricting the ability of companies to sue for libel.
This clause is the only contentious section left of the Defamation Bill which is now in the Ping Pong stage – meaning it is will be rapidly batted back and forth between the Lords and the Commons in the coming days and weeks until agreement is reached.
The vast majority of the Bill has been agreed, but this week the Commons rejected a Lords amendment stating that companies could only sue for libel if they could prove financial harm.
The new Labour amendment bids to reinstate the bar on defamation claims by organisations "trading for profit" unless they can show a publication has "caused, or is likely to cause, substantial financial loss to the claimant".
A key change removes the phrase "body corporate" from the contested clause, which was thought likely to cover charities, making it much harder for them to bring defamation cases.
A Ministry of Justice spokesman said: "The Government is concerned that some of the changes made by the Lords are unnecessarily costly and restrictive. This needs to be addressed.
"We understand the strength of feeling over whether corporations should be required to demonstrate serious financial loss. We are actively considering this and will listen carefully to the views of both Houses."
Labour Peer Baroness Hayter said: "Labour's amendments in the Lords are to ensure that the Government lives up to the vocal support it gave to the issue of requiring a threshold of 'substantial financial harm' for organisations trading for profit by supporting this in legislation.
"We also want such bodies to have to have permission of the court to pursue an action, and for organisations providing public services to lose their right to sue.
"The Government's hint of support on the first issue needs to be translated into a concrete amendment."