The libel laws affect publications on sale in England
Urgent action is needed to reform out-of-date libel laws which restrict free speech in publications on sale in England, campaigners say.
English PEN and Index on Censorship say the strict laws are used by wealthy foreign individuals to "bully people who try to hold them to account".
Their report includes a call to ensure internet service providers are not held responsible for blogs they host.
The Ministry of Justice says it would "carefully consider" the suggestions.
Index on Censorship promotes understanding of freedom of expression, while English PEN supports writers and readers around the world.
Their report lists recommendations they say should form the basis of a new Libel Bill to update the existing regime.
It follows a year-long inquiry called Free Speech Is Not For Sale, which identified 10 areas of concern.
It says libel law "imposes unnecessary and disproportionate restrictions on free speech, sending a chilling effect through the publishing and journalism sectors in the UK.
"This effect now reaches around the world, because of so-called 'libel tourism', where foreign cases are heard in London, widely known as a 'town named sue'.
"The law was designed to serve the rich and powerful, and does not reflect the interests of a modern democratic society."
The report argues that liberal regulation would better serve the public interest than a strict regime that restricts media freedom, although it does note that journalists should not be able to defame people "with impunity".
Capping libel damages at £10,000 and making an apology the chief remedy
Shifting the burden of proof so claimants have to demonstrate damage
Preventing cases from being heard in London unless 10% of copies of the offending publication are circulated in England
Stopping large and medium-sized companies from being able to launch libel actions unless they can prove malicious falsehood
Making some internet comments exempt as part of efforts to reflect the arrival of the world wide web
Establishing a libel tribunal, along the lines of employment tribunals, as an alternative to expensive full court trials
Reducing the prohibitive cost of defending libel actions by capping base costs and making success fees non-recoverable
Strengthening the public interest defence and expanding the definition of fair comment
John Kampfner, chief executive of Index on Censorship, said the report was "an important milestone in modernising our antiquated and chilling approach to free expression".
He added: "There are US States who view English libel law as so damaging to free speech they have passed laws to effectively block the decisions of English judges."
Mr Kampfner welcomed suggestions that a forthcoming report from MPs would conclude that it was "possible to devise laws that protect innocent people from harassment while encouraging dogged investigation".
A Ministry of Justice spokesman said: "The government has already taken a number of steps to control costs in publication proceedings...
"As part of our future work in this area, we will carefully consider the recommendations in the English PEN and Index on Censorship report, alongside those of the Department for Culture, Media and Sport select committee report into press standards, privacy and libel, which is expected shortly."
Under the current law, internet service providers (ISP) are held responsible for content published using their servers that are viewed by people in England.
Padraig Reidy, news editor of the Index on Censorship, said the ISPs often "don't have the legal resources to fight legal action so they just take stuff down".
"A change in the law would give them the strength to say 'it's up to the person that runs the blog, not the ISP."
Mr Reidy also cited cases of comments posted on other people's blogs.
"If you don't pre-moderate your blog's comments you can be held responsible, and that's extremely dangerous."