The banking giant’s proposal came as it painted a bleak picture of the future for UK publishers in light of falling circulations and ad revenues.

"We worry that without a relaxing of M&A rules, the worsening financial situation of some newspaper publishers could eventually force them into trouble with debt and lead to more local title closures – precisely what the government aims to avoid," JPM said.

It predicted that by amending the credit terms and banking covenants, the industry could see a revaluation of the sector, "possibly in 2009".

However, JPM's predictions for newspaper publishers such as Johnston Press and Trinity Mirror remained cautious, with it expecting a combined 18% drop in advertising revenues for next year, and a 5-6% fall in circulations.

It reserved higher hopes for the Daily Mail General Trust, as it believes DMGT has the most resilient business to business (B2B) arm to fall back on.

The calls for consolidation come as overall UK ad spend is expected to decline by 6% - more than any other developed country, guardian.co.uk reported.