BBC plans to develop online local video services, which could have threatened the future of many weekly and regional newspapers, were thrown out today by the corporation’s governing body.

The plan to use the licence fee to fund a service which would have provided local news and sports coverage was fiercely opposed by commercial organisations, including ITV.

Sir Michael Lyons, chairman of the BBC Trust, 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,” said Sir Michael.

Shadow culture and media secretary Jeremy Hunt wrote to Sir Michael saying that the plan to set up 65 local websites across the country could have a devastating effect on local and regional newspapers.

David Newell, Director of the Newspaper Society, which represents local and regional newspapers, said: “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.”

l Jonathan Ross will learn whether he can return to his job as a BBC presenter when the corporation’s governing body responds to the Andrew Sachs row today.

The BBC Trust will publish its findings about the obscene phone calls to the Fawlty Towers actor broadcast on Russell Brand’s Radio 2 show last month.

Brand has already quit the BBC for his part in the affair and Ross is currently suspended without pay for three months.