Jack Straw says radical change is needed to protect fair comment
Proposals to shake up the libel laws in England and Wales are being drawn up by the government.
There has been growing concern at the rise of "no-win, no-fee" cases in the courts threatening freedom of speech.
Justice Secretary Jack Straw said the system had become unbalanced and radical change was needed.
He said large fees for defamation lawyers were encouraging so-called libel tourists from abroad to bring cases in British courts.
Mr Straw said it was very important that people were able to take action if they were seriously defamed.
But, in a newspaper interview, he suggested that the system had got out of hand.
He said that journalists and academics were finding that their freedom to offer fair comment was being restricted by big corporations.
Freedom of speech campaigners have suggested that libel payouts should be capped at £10,000 with apologies becoming the main remedy.
There have also been calls for the burden of proof to be shifted so that claimants have to demonstrate damage.