Ministers announced on Tuesday that they will allow Ofcom, the new communications regulator, to devolve control of broadcast advertising to a new self-regulatory body similar to the Advertising Standards Authority.
The rethink is a victory for the ad industry, which has been at loggerheads with the government over its reluctance to give a firm green light to self-regulation for TV and radio ads. The Advertising Association had threatened to end talks with Whitehall after it appeared to cool on the idea.
But the government adopted much more positive language about the AA's plan this week when it replied to the Parliamentary committee, headed by Lord Puttnam, which has been examining its draft communications bill.
The culture secretary Tessa Jowell and the trade and industry secretary Patricia Hewitt said: "The government has reviewed the position and will modify the bill to ensure there are no unnecessary barriers to self-regulation. Broadcast advertising regulation is an area where Ofcom may consider contracting out arrangements if appropriate, subject to the industry coming forward with suitable proposals."
The ministers added: "The government recognises that self-regulatory bodies can play an important role in helping Ofcom to achieve its objectives."
Andrew Brown, the AA's director-general, welcomed the rethink. He said: "This goes further than the white paper. There are no wishy-washy words about co-regulation; it is talking about self-regulation."
However, industry leaders acknowledge that a significant amount of work needs to be done before self-regulation of broadcast advertising can be introduced.
One matter needing to be resolved is the size of the levy imposed on advertisers to fund the extension of self-regulation into broadcast and how it would be collected.
Another would be funding of the pre-clearance system, the cost of which is currently born by the Independent Television Commission. With pre-production costs higher for TV than any other medium, most advertisers are likely to want to retain the system rather than risk problems after commercials go on air.
Brown said the challenge now for advertising and broadcasting was to produce workable proposals now that the government had allayed fears the idea was a non-runner.
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