The government has shied away from introducing a wide-ranging bill to reform the communications industry prompting claims that it is playing politics with the sector.

Ministers announced yesterday that the bill will be brought forward in draft form despite a widespread expectation that Labour was ready proceed with actual legislation.

Insiders have suggested that the bill, which was to include measures to relax cross-media ownership rules, has been delayed as a tactic to tame the Murdoch press during the course of a euro referendum campaign.

The Times and the Sun newspapers both supported Labour at the general election although they are expected to oppose any move to take Britain into the single currency.

By delaying the bill, which would have benefited Murdoch by lifting the 20 per cent cap on control of the newspaper market, Labour has been accused of firing a warning shot that the tycoon should not use his newspapers to attack moves to take Britain into the eurozone.

Proposals to relax ownership rules will now be published in draft form, to be followed by three months of consultation with the industry. A bill is not expected to be formally introduced in parliament until 2003 or 2004 - possibly after a referendum on the single currency.

The decision to delay the legislation leaves several mergers stuck in the sidings. Carlton and Granada are awaiting the government's "say so" before they can merge whilst major radio companies need to see the rules relaxed before they can consolidate.

Legislation to establish a single regulator for the media and communications industries, which would also have been contained in the communications bill, will be brought forward as paving legislation.

The industry said it had been led to believe that the government would move more rapidly to establish Ofcom, the new body which will be responsible for media, telecoms and the digital sectors.