The Australian and the Victorian Office of Police Integrity are conducting behind-the-scenes negotiations over a report critical of the newspaper and journalist Cameron Stewart.

The Federal Court hearing into the affair, in which The Australian is seeking to have the OPI’s report permanently suppressed, was due to begin today but has been adjourned until June 7 because of the negotiations.

The high stakes case, in which the reputation of Stewart, The Australian and the OPI are all in the balance, seems now to be entering a new phase. It may be back to stage one — when the OPI originally showed The Australian its draft report as part of the normal processes of administrative law.

The newspaper’s response was to successfully seek a Federal Court injunction preventing the report’s release. But now, in what it is tempting to see as a back down, the newspaper is apparently back at the negotiating table.

The Australian’s editor, Paul Whittaker, did not return calls before Crikey’s deadline this morning.

Whether the newspaper and the OPI, which are at loggerheads in court and in the public sphere, can reach agreement is open to doubt. The OPI’s federal counterpart, the Australian Commission for Law Enforcement Integrity, which jointly authored the report, has already cut a deal with the newspaper in which ACLEI agreed not to release the report.

The OPI is unlikely to agree to a similar course, with director Michael Strong understood to be critical of ACLEI’s conduct and determined to fulfil his original intention of reporting to Parliament.

The Australian’s continuing editorial campaign against the OPI, featured prominently on Media Watch this week, as well as being previously reported on Crikey.

The case concerns Australian journalist Stewart’s scoop of August last year, in which he broke the news about a counter terrorism operation on the very morning of raids in which four men were arrested, accused of plotting to bomb an army base.

The Australian’s legal action against the OPI seeks to have its investigation declared invalid, and the report permanently suppressed.

The Australian has so far succeeded in gaining Federal Court orders preventing the OPI from tabling the report in Parliament, and from briefing state and Commonwealth prosecutors about “serious criminal offences” committed during Stewart’s research.

Last week the Victorian Attorney-General, Rob Hulls, entered the case on the side of the OPI, contesting the power of the Federal Court to stand between the Victorian Parliament and its officer, the director of the OPI, Michael Strong.