The BBC Trust today rejected the corporation’s £68m plans to introduce video to 65 of its local web outlets in what will be seen as a major victory for the regional press lobby.

The Trust reached its decision after conducting a six-month long inquiry into BBC management’s proposals to introduce a web-based local video service across the UK.

A separate inquiry by the industry regulator Ofcom found that the plans would have “a significant negative market impact” on commercial providers such as regional newspapers.

Industry leaders today warmly welcomed the decision – but the National Union of Journalists branded it a “missed opportunity.”

Chairman of the BBC Trust Sir Michael Lyons said: “It is clear from the evidence that, although licence fee payers want better regional and local services from the BBC, this proposal is unlikely to achieve what they want.

“We also recognise the negative impact that the local video proposition could have on commercial media services which are valued by the public and are already under pressure.

“We believe the BBC’s priority should be improving the quality of existing services. The public wants better quality regional television news programmes and more programmes of all kinds produced in and reflecting their areas.

“We would expect BBC management to consider carefully the conclusions of this public value test before returning to us with new proposals.”

Ofcom said in a statement: “Overall, we conclude that the launch of the proipsal would have a significant market impact on commercial providers.

“Almost every local newspaper now has its own website. The BBC local video service would represent a major presence in this area and is likely to be of significantly greater scale than commercial providers could offer.”

The decision follows a fierce lobbying campaign against the proposals by leading industry organisations including the Newspaper Society and the Society of Editors.

They have consistently argued that the BBC plans would duplicate what is on offer on local newspaper sites and would amount to unfair competition.

Society of Editors executive director Bob Satchwell said today: “Quite clearly the BBC has recognised the potential damaging effect, particularly in regional newspapers, which are facing the double challenge of huge structural change as well as the general economic malaise.

“It’s always good to know that organisations such as the BBC Trust and Ofcom will listen to a case which has been so powerfully put and sensibly explained by the regional media.”

Newspaper Society director David Newell added: “We are pleased that the BBC Trust and Ofcom have responded to the industry’s concerns and rejected the BBC Local Video plans for the time being.

“This is a proposal which the BBC should never have made and would have severely reduced consumers’ media choice and the rich tapestry of local news and information provision in the UK.”

Trinity Mirror chief executive Sly Bailey said: “We are delighted that the BBC Trust and Ofcom have recognised our view that BBC Local plans would have posed a severe threat to the commercial regional and local media marketplace.”

Northcliffe managing director Michael Pelosi added: “This is a victory for common sense. We felt strongly that the BBC proposals would duplicate services which are already provided by local media organisations.”

But NUJ general secretary Jeremy Dear said: “Against a significant decline in local journalism, here was an opportunity to take a small step in the opposite direction by actually enhancing local news provision.

“Newspaper employers have spent years taking huge profits out of local media whilst cutting jobs. Now they have helped stop new jobs being created because they said such competition would stifle their investment.”