Journalists have rarely ranked high in the affections of the British public. Occasionally venerated for noble efforts abroad or campaigns at home, they are mostly left to languish alongside society's bottom feeders - politicians, for example, or estate agents. Even the clergy is more trustworthy than the British hack, according to Ipsos Mori, and journalists don't generally molest your kids. Neither do the clergy, I am legally obliged to point out. Generally.

But the phone hacking scandal of 2011 has done unprecedented damage to the reputation of our fourth estate. It has taken the public disgust at the News of the World's hacking of Milly Dowler's phone to bring about the first serious investigation into press ethics in more than a decade, the results of which will seriously influence our newspapers' future.

Until now the press has been watched over by a self-regulatory body, the Press Complaints Commission (PCC), a toothless and ineffective organ that can impose no significant penalty on transgressors and whose only effective contribution to the media landscape is its Editors' Code of Practice, a well-meaning if oft-ignored document that sets out solid ethical standards for journalists.

The PCC, however, is attempting to grow some teeth. It put a number of proposals to a summit of editors last month, including a kind of "self-licensing system" in which publishers would voluntarily sign up to a contract that binds them to certain terms. A breach of the terms would then enable the PCC to impose fines on the culprit.

Such a system is impractical for a number of reasons, not least the challenge of persuading publishers to sign up for it. The terms of any contract would be exceptionally difficult to define and cause vast controversy when enforced. Newspapers would have to submit to an investigation after a complaint is made against them, the result of which would determine what financial penalty they are to face, if any. Why would any newspaper put its trust in the PCC to adjudicate fairly in contentious cases when it has already proved itself to be inept and easily manipulated?

Perhaps more pertinently, why would Richard Desmond's titles sign up? His Daily Star has been caught time and again fabricating stories, misrepresenting the facts and generally indulging in the kind of journalism that makes the majority of Fleet Street ashamed. And if a rival isn't signed up then why would another paper volunteer to risk financial penalty for a story that their competitor will run without fear of retribution? Turkeys rarely vote for Christmas.

At the other end of the spectrum lies statutory regulation, itself a dangerous threat to the freedom of the press. The Trafigura controversy shows that our lawmakers cannot be trusted with free speech, let alone another authority. Besides, a rational and independent regulator is unlikely now and is certainly not guaranteed in perpetuity. Once the handcuffs are on, they are very difficult to remove. We must not in one stroke of public outrage concede liberties that took our press centuries to win.

Yet, frightening as statutory regulation is, by the time the influence of bloggers, anonymous commenters and social network gossip is taken into account, the concept of a regulated press seems slightly absurd. Whatever a newspaper is too frightened or too sensible to say will already be all strewn across Twitter, Facebook and even the newspaper's own website in the form of hastily moderated comment streams. Do these individuals face regulation too?

Voluntary licensing is impractical and statutory regulation is dangerous - yet something does have to change. That change lies in heart of the press itself. Our newspapers must win back the trust of the public and adhere to the values that make journalism so important - by exposing corruption, challenging authority, comforting the afflicted and afflicting the comfortable.

The Leveson Inquiry and the fall-out of the phone hacking scandal may have given the industry one final chance to put its own house in order. If it does not, then statutory regulation isn't far away. The line between right and wrong may often be grey, but murdered schoolgirls make for sharpened contrasts. The press cannot make such mistakes again.

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