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    Hacking victims pressure British PM on media rules

    * Inquiry expected to recommend tighter media restrictions

    * Cameron says Britain must keep a free press

    * Newspapers seek to keep form of self-regulation

    LONDON, Oct 7 (Reuters) - Prime Minister David Cameron said

    Britain would avoid "heavy-handed state intervention" of its

    national press after phone hacking victims urged him on Sunday

    to remain open-minded about the recommendations of an inquiry

    into media ethics.

    Actor Hugh Grant, singer Charlotte Church and more than 50

    other victims of press intrusion said in letter to Cameron they

    feared he had already decided to reject statutory regulation of

    the media before the inquiry's findings were published.

    Cameron said he would not prejudge the inquiry and confirmed

    he had told Grant he would implement its recommendations

    providing they were "not bonkers".

    "It's quite clear people have been abused, people's families

    and lives have been torn up by press intrusion. The status quo

    is not an option," he told BBC television.

    Cameron ordered the wide-ranging investigation at the height

    of a scandal last year into illegal phone hacking at Rupert

    Murdoch's now-closed News of the World tabloid when it emerged

    that reporters had hacked the phone of a murdered schoolgirl.

    The inquiry, led by judge Brian Leveson, revealed the

    inadequacy of British newspapers' current system of

    self-regulation and is expected to recommend a tougher regime to

    ensure victims of press intrusion can receive effective redress.

    Leveson has yet to publish his findings after eight months

    of hearings that ended in July.

    Cameron will have to navigate a difficult political path in

    responding to the recommendations to avoid being accused of

    trampling on press freedoms or being soft on tabloid excesses,

    especially given his close ties to two of those who have been

    charged with offences relating to phone hacking.

    His ex-spin doctor Andy Coulson was a former News of the

    World editor and as was his friend Rebekah Brooks, who later

    oversaw Murdoch's News International arm. Their trial has been

    set for September next year.

    "We don't want heavy-handed state intervention. We've got to

    have a free press," Cameron said.

    "We all want to put in place a sensible, regulatory system.

    We're hoping that Lord Justice Leveson is going to crack this

    problem for us, but we must let him do his work first."

    Some newspapers have proposed a beefed up form of

    contractual self-regulation as a way of avoiding statutory

    control, an approach the hacking victims rejected as inadequate.

    Grant, a director of the Hacked Off lobby group that

    organised the letter to Cameron, said he wanted a new media

    regulator who would be independent of both the newspaper

    industry and government.

    "It's actually the way solicitors are now regulated, it's

    the way doctors are now regulated, and they're not complaining,"

    he told BBC television.

    "I do not see the slightest danger to freedom of expression,

    freedom of speech from that."