Culture secretary Tessa Jowell has sought to reassure newspaper editors about the BBC's use of public money to set up very local services.

In two letters to Neath MP Peter Hain, she said she was aware of concerns about the impact of the BBC expansion into local online news on local newspapers and about the new BBC Trust's effectiveness as a regulator.

But she said the trust's work to ensure the broadcaster fulfilled its public service obligations would be underpinned by an "unprecedented obligation to openness and transparency".

The minister's letters followed a regional meeting between members of the Society of Editors in Cardiff and MP Peter Hain, where he agreed to raise the issues with the culture secretary.

Spencer Feeney, regional chairman of the SoE said: "We raised our concerns about the BBC's attack on our traditional market place.

"Peter Hain promised to pursue the issue and Tessa Jowell's letters seems promising.

"It clearly states that the BBC Trust has a duty to have regard to competition issues."

On the subject of the BBC's plans to launch a local news service, which is currently being piloted in the West Midlands, Tessa Jowell wrote: "I should make clear that under the current arrangements, the Secretary of State's approval is required for the implementation of any new service.

"However, in their published response to the Green Paper, the BBC has said that 'Full roll-out of a new local news service will not be approved until a full public value test has been carried out.' As part of this an assessment of market impact will also be made.

"The new arrangements we will set out for the BBC in the new Charter to begin in 2007 will lay out an even more rigorous approval process for new services launched by the BBC, requiring that a Public Value Test, including a Market Impact Assessment conducted by Ofcom, be carried out on all proposed new services, while still allowing the Secretary of State to intervene via procedural veto.

"Also for the first time, the Charter and Agreement will set a duty on the BBC to have regard to the wider market."