Addressing the Newspaper Conference annual lunch, he acknowledged that local journalism was currently "a tough business to be in."

"A healthy culture of local news is a public good and Government can't just wash its hands," he told the lunch, attended by Westminster correspondents of regional newspapers and their guests.

He said the Digital Economy Bill, which receives its second reading this week, will make the case for supporting public service content nationally and locally.

Lord Mandelson also used the lunch to announce a strengthening of the powers of regional development agencies, which the Tories want to abolish, promising to give them stronger links with the further education sector.

He claimed the agencies had helped spark a "renaissance" in regional confidence in recent years, producing more than four times the regional economic growth for every pound spent or invested and creating or securing more than 200,000 jobs in the last decade.

"Fifteen years ago the talk in Manchester, or Newcastle or Birmingham or Sheffield or any of the industrial revolution cities was still too often about what had been lost," he said.

"These days it is increasingly about what is being built and renewed, the new confidence, the new links to Europe or the global economy, the new jobs."

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