The Max Mosley case had just about everything.

Up until March this year, few had heard of the Formula One boss, but the News of the World's exposé, which accused him of being involved in a "sick Nazi orgy", ticked all the right boxes for an almost perfect tabloid front page.

Not only did the central character happen to be the son of the 1930s Fascist leader Sir Oswald Mosley, but indulging his liking for sadomasochistic role-playing behind the gentrified façade of one of London's most exclusive postcodes, it was a green light for adjectives like "grotesque" and "depraved" to be thrown around with abandon.

Unfortunately for the Sunday red top, a judge yesterday decided the one thing the story lacked was public interest.

James Price QC, who has previously presided over defamation battles involving George Galloway, Roman Polanski and Paul McKenna, described the covert recording of Mr Mosley's sex sessions as a "gross and indefensible intrusion" and dismissed the paper's accusations the 68-year-old had played a concentration camp commandant and a cowering death camp inmate as false.

Mr Mosley, whose extra-curricular activities came as something of a shock to his wife of 48 years and two sons, decided against a victory speech on the steps of the High Court. Instead, he issued a statement hoping the judgment would deter newspapers from pursuing "invasive and salacious journalism" and, just to show what a decent chap he is, added he would be keep his promise to donate the £60,000 damages to the FIA Foundation for road safety projects.

Unsurprisingly, not everyone was happy to share in his celebration. The News of the World remained unrepentant and media experts said the ruling had effectively placed legitimate investigative journalism in handcuffs.

"It is a pretty bad day for freedom of the press," says Damien Crosse, partner in Leeds law firm Pinsent Masons.

"The balance between the right to privacy and public interest has always been a delicate one, but I think this ruling will make papers nervous about running stories which may land them in court. The current privacy laws are enshrined in the Human Rights Act, but I think this case will heighten calls for a Parliamentary discussion about what is meant by privacy and public interest. The definition of these terms is far too vague."

The judge refrained from calling Mosley V News of the World a landmark case, and declined to award punitive damages, which could have topped £1m. However, the £60,000 compensation is a record amount and a further sign for some that newspapers are struggling to fight their corner.

In 2005, in what one lawyer called a "triple whammy against freedom of expression", singer Loreena McKennit was awarded £5,000 and granted an injunction stopping a former friend including personal material about her in a book, on the basis she had violated a duty of confidence. A year later a man involved in an adulterous relationship was granted another injunction preventing the betrayed husband going to the media.

Mr Mosley's victory will inevitably be seen as little more than a gagging order, but, according to Peter Burden it's the kind of judgement which has been too long coming.

"Publishing intimate details of people's private lives can cause huge amounts of distress, and papers must be able to prove the story is in the public interest," says the author whose book News of the World: Fake Sheikhs and Royal Trappings looks at standards in tabloid journalism.

"Few people knew who Max Mosley was and, while he clearly likes sex with a difference, there has never been any suggestion it had any adverse effect on his job as president of the FIA.

"I think very often the News of the World has stories with a basis of a truth, but it's the embellishments where they come unstuck.

"There has been a lot of talk about how the freedom of the press is under threat, but that's just nonsense. If journalists have a genuine story about corruption or gross hypocrisy they are absolutely protected by the law, and the Max Mosley case hasn't changed that. Had it been a bishop, rather than a previously little known motor sports boss, taking part in S&M sex sessions while preaching chastity to his flock they might have had a case."

Throughout the hearing, Mosley cut a bullish figure. While more sensitive souls might have gone into hiding, waiting for the dust to settle, he insisted the public are much more open-minded than the tabloid press give them credit for, and his openness could prompt others to have their day in court.

"Often the person at the centre of these stories is so horrified at the thought of having the details of their private life raked over for a second time in court, they don't pursue a legal action," says Peter.

"The preferred option is 'least said soonest mended', but I think we will now see a rise in privacy breach cases. However, I don't think we need to feel too sorry for the press. Papers often factor in the likely court costs when they run a story, the principle being that the benefits will far out weigh the damages. While the News of the World has taken a pretty big hit, the story has had 3.5m hits on its website and is no doubt responsible for a healthy boost in sales.

"People say this ruling is giving into the rich and the powerful, but it's usually these kind of people who are the subject of these kind of stories and, like anyone else, they deserve their right to privacy and I think we are moving in the right direction."

However, while the High Court may have taken a hard line with the News of the World, sex and celebrity sells and it will take more than a legal ruling to change that.

"This obsession with celebrity is something which has developed over the last 20 years ever since Hello! was first published in this country," says Peter.

"Rupert Murdoch recognised it when he promoted Sun gossip columnist Piers Morgan to editor of the News of the World and since then whole emphasis of the tabloid press has shifted.

"Celebrities' private lives have turned into an internationally- traded commodity, but we have all encouraged it. It's not that long ago that the News of the World ran a front page story under the headline "Burrell: I Had Sex With Diana", it's just puritan nonsense, but it means they sell between five and 10 per cent more papers.

"I don't want to sound like Mary Whitehouse, but I really believe this kind of reporting is destructive, it has contributed to the general malaise within society and without it we'd all be better off."