The OFT's initial proposal to open magazine distribution up to competition last year meant that up to 1,000 magazine titles were at risk of closure, posing a substantial threat to UK printers.

Major retailers such as Tesco, Sainsbury's and Asda were identified as the only potential beneficiaries of last year's proposals, which could have also led to the closure of up to 12,000 newsagents.

Fierce industry opposition had been mounted to the original draft proposal, which recommended treating magazines and newspapers differently, opening up the magazine distribution market to competition while exempting newspapers from competition rules.

"Just a few months ago the OFT was on the brink of a decision that could have been seriously damaging to the industry," said Ian Locks, chief executive of the Periodical Publishers' Association.

The decision to return to the drawing board follows an internal review ordered by a new management team at the OFT.

Printers and publishers were given fresh hope last November after a regime change at the OFT and a letter from MP Tessa Jowell opposing the break up of the existing distribution system.

A new draft proposal on the distribution system is expected in May, followed by a consultation and final opinion due in the autumn.

Three major players currently dominate the magazine and distribution market: WH Smith, Menzies Distribution and Dawson News.