Lord Mandelson made his comments at the second reading of the Digital Economy Bill in parliament yesterday.
He attacked the view held by Rupert Murdoch, owner of News Corporation, which states the only journalism that has a place in the world is the kind that is profitable enough to support itself.
Mandelson told fellow members of the House of Lords: "There are some in the commercial sector who believe that the future of British media would be served by cutting back the role of the media regulator.
"They take this view because they want to commandeer more space and income for themselves and because they want to maintain their iron grip on pay-TV."
He also singled out Fox News, owned by Murdoch, warning against the erosion of impartiality in news, and called on the Conservatives to back Ofcom.
The Sun, one of News International's titles, the company part owned by News Corp, said this year that it was switching its support back to the Conservative party after supporting Labour since the 1997 general election.
The Tory party has since outlined its media policy, saying if it was voted into government it would de-regulate media ownership, scale back the reach of the BBC and the BBC Trust and strip away what it views as Ofcom's ability to dictate policy.