Tony Gallagher, the editor of the Daily Telegraph, has said he is "hugely attracted" to the idea of an arbitration system to resolve legal complaints, which he told Lord Leveson would be "one of the best possible outcomes" of the inquiry.

Appearing before the Leveson inquiry today, Gallagher called for "some kind of arbitral system" to be "embroidered" into any potential replacement of the Press Complaints Commission, which is currently reviewing its own structure.

Leveson said while his decision on a recommended model has not yet been made, "it is part of the overall issue that I believe should be considered".

He repeated earlier comments that any system must remain independent, and "involve people from the business, ... independent people and probably has to involve some legal input".

"But I could visualise a system that has three limbs," Leveson added, which would handle complaints, offer a regulatory mechanism and an arbitration mechanism.

This would "not be statutory in the sense it is defined by statute, but statutory in the sense that it provides compulsory background", he added.

Gallagher responded to say he found the idea "very attractive", adding that a low-cost arbitration service would also be "a great way of embracing internet news providers".

He also told the inquiry today that more needs to be done "to increase the nature of pariah status for those organisations not members of the body".

"If not enforceable by some kind of civil law, I think the industry should do a lot more to ensure rogue publishers are given no access to benefits enjoyed by others", such as access to lobby briefings, he added.

Earlier in his evidence session, when asked about the handling of complaints, Gallagher said he was "not sure a readers' editor is a wholly helpful idea".

"The person who should be dealing with readers is me ... I think it might be an unnecessary layer of bureaucracy. I prefer to deal with issue myself."

But he added that if there is an "industry consensus" on the matter he would be "happy to go along with that".

He also revealed that while the Telegraph does not currently have a corrections column, such as that recently introduced by the Daily Mail on page two, he "may need to consider [this] in due course".