David Cameron has come under increasing pressure ahead of Monday's Commons vote on press regulation as rival plans were set out on Friday after the failure of cross-party talks.
Labour and the Liberal Democrats joined forces to publish a "strengthened version" of the Prime Minister's proposed royal charter to establish a new watchdog.
They signalled they still believed legislation was required to underpin an independent self-regulatory body as recommended by the Leveson Inquiry into phone hacking.
That leaves them firmly at odds with Cameron who believes that would threaten press freedom and make the system unworkable as newspapers would refuse to sign up.
MPs will choose between the two approaches in a series of votes on Monday.
The premier faces a tough battle however, with his Lib Dem deputy and Opposition leader Ed Miliband wooing Tory backers of tougher regulation to their cause.
Publication of the rival draft royal charters in quick succession this afternoon exposed the main remaining areas of difference between the two sides.
Miliband said the Lib/Lab version differed from the Tory plan in "three crucial respects".
"First, this must be an enduring settlement. That means underpinning the charter with the minimum amount of legislation needed to guarantee its success and independence over time.
"We want to ensure that future governments cannot tamper with the new system, either by watering it down under pressure from the newspapers, or introducing new draconian measures which would threaten the freedom of the press.
"Second, the regulator should be properly independent of the press, so we would remove the industry's power of veto over appointments.
"Finally, when wrong is done, the regulator should be able to investigate, as well as ensure a proper and prominent apology is made."
Clegg said it was "a strengthened version of the Royal Charter that can deliver what Leveson wanted" and should reassure both press and victims.
"I hope the approach we are publishing today plots a middle course between the dangers of doing nothing and the fears some people have of a full-scale legislative approach," he said.
"This is a system that both myself and Ed Miliband back, and that I believe Conservative MPs can also support."
MPs will vote on Monday on an amendment to the Crime and Courts Bill which would enable the courts to impose "exemplary damages" in libel cases and other civil actions on newspapers which have not signed up to the regulator.
Cameron regards the measure as essential to his scheme by acting as a spur to newspapers to sign up to a regulator system he says would be the toughest ever in Britain.
Allies acknowledged there was a "strong chance" it would be defeated however, as the Tories have no overall majority in Parliament and are opposed to their coalition partners.
Speaking in Brussels at the end of the EU summit, the Prime Minister said: "It seems to me that the other parties are moving away from a sort of full-on legislation on Leveson and accepting that a royal charter is the right way forward.
"We can't go on with a situation where Bill after Bill of the Government's legislative programme is potentially hijacked or contaminated with motions and amendments that are about something that is completely different. That's why I think it is right to bring this to a conclusion".
Shadow culture secretary Harriet Harman said she hoped cross-party agreement could still be reached ahead of Monday's votes - warning the press could exploit political divisions not to sign up to any new system.
"I hope that even before we get to Monday, we will get that cross-party agreement which I think is so important," she told Channel 4 News.
"The press have always done divide and rule and we don't want the press using as an excuse to not comply with this new framework 'oh well, the Prime Minister doesn't agree with us'."
She denied suggestions the talks were scuppered because Labour hardened its stance on the need for legislation under intense pressure from campaign group Hacked Off.
While the talks were still ongoing, the party saw a draft press release prepared by the group - which represents phone-hacking victims and is fronted by actor Hugh Grant - attacking it for doing a deal with the Government.
The revelation of the release was dismissed as a dirty tricks campaign and Harman insisted its commitment on statutory underpinning had been consistent.
"We make no apology for having the concerns of the victims absolutely at the heart of this - the victims are the reason the Leveson Inquiry was set up," she added.
A Hacked Off spokesman said: "This draft press release was written as a worst case scenario and never formally released to the media.
"In the event, Labour and Lib Dem support for Leveson has been rock solid and the victims of press abuse are very grateful for it."
Culture Secretary Maria Miller earlier warned that enshrining regulation of newspapers in legislation would open the door to "state licensing of the press".
But Conservative backbencher Robert Buckland indicated that he may rebel over concerns that the Prime Minister's proposals will give the press too much leeway to carry on misbehaving.
Labour sources made clear that they will expect the PM to "accept the will of the House" if their proposal for a "Leveson-compliant" royal charter is approved by MPs.
Downing Street dismissed suggestions that the differences on Leveson posed a threat to the Coalition, saying it was "not the first time that coalition parties have taken a different approach on important but specific issues".