The report of the overhaul comes two weeks after Downing Street attempted to play down speculation that it was setting up a unit to coordinate media relations during a war in Iraq.
Number 10 had previously insisted, admitted before the first shots were fired, that the Ministry of Defence would take the lead in media relations.
However, since the start of the war and the vivid images that are being broadcast back home, including those by Arabic station Al Jazeera, of Allied captured, dead and wounded, the strategy seems to be shifting.
Campbell, who is director of communications and strategy at Number 10, wants to tackle the shift in expectation as coalition forces encounter stiffer resistance than expected and the realisation that the war will be longer than first anticipated.
It follows a weekend that has seen more British troops killed in action. A Royal Marine was killed and several were wounded in a river ambush near the Faw peninsula.
It came as Royal Marines launched a major assualt on the Abu Al Khasib suburb of Basra last night, involving more than 600 troops, the biggest single engagement for the regiment since the 1982 Falklands War.
The change in strategy comes following much tension between Number 10 and the media. Last week, Labour Party chairman John Reid clashed with BBC political editor Andrew Marr and called the BBC a "friend of Baghdad".
It follows a growing disenchantment among journalists about some of the information being handed out by the Ministry of Defence. Defence secretary Geoff Hoon last week had to retract claims of biological weapons being found and a damaging bust-up about the fate of two British soldiers. Downing Street claimed they had been executed by Iraq, although it was unclear whether they had or not.
It is unclear if Whitehall will re-establish the Coalition Information Centre, which played "an important role" during the 2001 war in Afghanistan.
Last week, it was reported that the international PR community had condemned President Bush's media operation on the Iraq crisis as unethical and untrustworthy.
Not one of the 423 PROs taking part in the study believed that the Bush administration's PR efforts were credible. Four per cent of those polled said the Iraqi PR campaign was trustworthy.
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