While giving evidence at the Lords Communications Committee's investigation into the future of investigative journalism, Hunt said: "it is clear to me that the local newspaper sector needs to consolidate."

Publishers have been calling for leniency from the OFT over newspaper mergers in the face of competition from new media.

In 2009 the OFT told publishers to "test the water", suggesting it would be open to the possibility of major consolidation. However, in October it deferred a decision on KM Group's attempt to purchase seven Kent titles from Northcliffe to the Competition Commssion, forcing KM Group to pull out of the deal.

During the investigation Hunt was questioned on the OFT's decision, which he would not criticise. However, he suggested that the cost involved could be altered to make it easier for smaller businesses to go through the Competition Commission.

He said: "I understand the concerns expressed by many people about that particular deal. I think you are absolutely right to say that the issue involved was primarily one of cost. It is not unreasonable, and I do not think that Northcliffe or Kent Messenger Group object to the idea of the competition authorities looking at their particular deal, but the process was so expensive that in the end it just became impossible for a small company to bear the cost of going through a full Competition Commission inquiry.

"I have asked my officials to look at what can be done in those processes and, indeed, whether, if there are any legislative changes to be made, they can be made in the Communications Bill that we are intending to put before Parliament in this Parliament."