Mike Wood has urged ministers to oppose legislation under Section 40 of the Crime and Courts Act, which if implemented will require newspapers to pay all court costs in libel and privacy cases, regardless of the outcome.
The law would only give protection to newspapers that sign up to Impress, a state-approved regulator that is bank-rolled by controversial former F1 boss Max Mosley.
Dudley South MP Mr Wood has cast doubt on the suitability of Impress to regulate the press, and warned that investigative journalism will be 'a thing of the past' if Culture Secretary Karen Bradley decides to implement Section 40.
"Putting newspapers in a vulnerable position where they would face having to pay vast sums in court costs, even if they are 100 per cent accurate, is wrong," he said.
"I don't believe for one minute that Impress represents a credible and independent body. There are a small group of public figures who appear to be hell-bent on pursuing an agenda against some national newspapers, and they do not care who gets caught in the crossfire.
"Local papers have not been involved in any of the scandals that brought us to this position, and are a vital part of the democratic process, yet it is papers like the Express & Star that will get punished for telling the truth.
"Section 40 will signal the death knell to the role that the open, free and responsible media plays in all of our lives.
"I hope that Karen Bradley reflects very hard on the damaging impact of Section 40 and makes the right decision."
Ms Bradley, who has acknowledged the threat the legislation poses to local newspapers, is due to make a decision on the future of press regulation following the completion of a public consultation.
The vast majority of newspapers in Britain are signed up to the Independent Press Standards Organisation (IPSO), which was set up in the wake of the Leveson Inquiry and is independent of any political influence. None have joined Impress.
The Government's Chief Whip Gavin Williamson has also backed calls to oppose Section 40, which he says will 'create a system' that will consign hundreds of newspapers to the scrap heap.
"Papers should never be put in a position where they are fearful of running stories that need to be put into the public eye," the South Staffordshire MP said. "Section 40 is an attack on our cherished free press."
West Midlands MEP Bill Etheridge said: "I am opposed to Section 40 and urge everyone to support local newspapers by taking part in the consultation."
To have your say on the proposals before 5pm on January 10, visit www.research.net/r/9WH5LV3 or write to Press Policy, Department for Culture, Media and Sport, 4th Floor, 100 Parliament Street, London, SW1A 2BQ.