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The proposals will allow US media giants such as Viacom, AOL Time Warner and News Corporation to take stakes in UK media companies such as Five and a single ITV.

It raises the spectre of largely American-owned TV networks in the UK, despite the US market being barred to UK companies. Some in the industry have called for the UK market to be opened up only if the US reciprocates.

Opening up the UK media market to non-European companies has already been objected to by the joint parliamentary committee chaired by Lord Puttnam, which was appointed to look into the bill.

Puttnam's main concern is that it would see the schedules crammed full of foreign programming. The government responded to this concern by saying that it would set limits on the amount of foreign programmes allowed on channels owned by foreign companies.

It could also create problems for Channel 4, which relies heavily on US sitcoms such as 'Friends' and dramas like 'The West Wing' for some of its highest audiences.

If Channel 4 rival Five was owned by a US company such as News Corporation, which already controls BSkyB, Channel 4's licensing deals could be threatened because US companies would be more likely to license programming to an affiliate.

UK media companies are also waiting for resolutions on a number of other issues. The BBC, ITV and Channel 4 have been lobbying the government to force BSkyB to lower the price it charges for carriage on its digital satellite network.

They are also against government proposals to change the terms of their licences to account for the switchover to digital TV by 2010. Their existing licences are automatically renewed, but under new proposals, they would have to reapply when they run out in 2014.

ITV companies Carlton and Granada are currently lobbying the government to relax the rules governing ownership of news provider ITN and today were supported by the Conservative Party opposition.

The upcoming communications bill, to be made law in the new year, allows the maximum stake that any one company can hold in ITN to reach 40%, but with Carlton and Granada preparing to merge the two companies would already own 40%.

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