Murdoch faces an inquiry over his 18pc stake in ITV

The Office of Fair Trading said the deal had raised "significant competition concerns".

It has recommended the holding by Murdoch's company BSkyB in the commercial broadcaster is referred to the Competition Commission.

The media regulator Ofcom added that the deal raised "public interest issues" over news provision in the UK.

Trade and Industry Secretary Alistair Darling has until May 26 to decide whether to refer the satellite broadcaster's holding to the Competition Commission.

OFT chief executive John Fingleton said BSkyB's stake, bought for £940million in November, meant that ITV was "no longer fully independent".

He said: "Given the high stakes for tens of millions of UK consumers, we believe these risks to competition merit further examination."

Ofcom is concerned that the change in shareholding at ITV could impinge on the broadcaster's licence commitments in areas like current affairs and news.

BSkyB's move for the stake last year drew fire from Sir Richard Branson for stifling competition in the British media.

Virgin boss Sir Richard, who at the time was merging his Virgin Mobile business with cable operator NTL, saw plans for a merger between his new company and ITV scuppered by the BSkyB acquisition. Even if Mr Darling decides not to refer the

case, the OFT might still hand its file to the Competition Commission, which would have the final say.

BSkyB and Virgin are already facing a court showdown after BSkyB withdrew its basic channels from Virgin Media in March, leaving viewers without channels including Sky One and Sky News, with many fans of hit shows such as 24, Lost and The Simpsons cut off mid-series.

BSkyB, which has defended its stake in ITV as a sound investment, said yesterday it would "continue to engage fully" with regulators.

A spokesman added: "Sky believes in choice and competition and supports an environment that fosters investment and dynamism."

ITV said it "noted" the announcement from the regulators but new chairman Michael Grade has previously highlighted concerns that the BSkyB stake, when combined with recent voting patterns, would be sufficient to block a vote requiring a 75 per cent majority.

The OFT launched an investigation into BSkyB's purchase in January. It said that "a relevant merger situation" had been created which could "substantially lessen" competition in the UK market.

It added that BSkyB had not offered "clear-cut remedies to its competition concerns".

Mr Darling also asked Ofcom to examine whether BSkyB's acquisition of the stake created public interest concerns.

Ofcom, which had launched its own investigation in March, said that the deal had implications for the provision of 'both cross media and television news' in the UK.