Prime Minister Julia Gillard remains in a fierce dispute with News Limited over a column written by Glenn Milne in The Australian on Monday, just as the government decides whether to hold a media inquiry in Australia.

Milne’s article alleged that Gillard lived with her former boyfriend Bruce Wilson in a house in Fitzroy, which  was purchased by embezzled union funds, a claim Gillard has always strenuously denied. The PM demanded for the story to be pulled and a full correction to be run, which happened mid-morning on Monday.

Yesterday, Gillard said the Milne column broke “all known standards of journalism” as he’d made “no approach to me to seek a comment or to check what was asserted”. “They clearly realised they had done the wrong thing and published a retraction,” said Gillard.

News Limited chief John Hartigan — who  Gillard called and questioned whether his papers would be running the story over the weekend — said he was “disappointed” by Gillard’s comments and that she was being “pedantic” about the issue, since it’s rare for columnists to call for comment.

Andrew Crook explained in Crikey earlier this week how the 16-year-old story came back into the spotlight, despite being easily shot down several times before:

“The weak Gillard link has been doing the rounds among the PM’s enemies for years. In 2006, Kim Beazley supporters revived them when they thought she was hatching a deal to knife him as opposition leader.

And in 2007, The Age’s Jason Koutsoukis wrote that he had been summoned to a meeting with a figure who had presented him with a disappointing file that included a “well-worn tirade aired in the Victorian parliament last century”.

…

On Friday, 2UE’s [Michael] Smith said one of the reasons for the rehash was that Gillard had said (to Milne in 2007) that she was “young and naive”. In fact, the PM has consistently shot down the suggestions with supreme force each time they get trotted out.

On Australian Story in 2006, she stated point blank that the suggestions were “absolutely untrue …”

Gillard’s attempts to kill the story raise serious questions about her judgment, declares Herald Sun columnist Andrew Bolt:

“Calls that look like an attempt at censorship have many sinister overtones, with threats of inquiries and forced sales left hanging in the air.

And I ask her: What are you so afraid of? What else would you stoop to in order to cling to power? I was considering resigning as a News Limited columnist.

I thought this company that I love, that I have long admired for its defence of free speech, had caved in to pressure from a Prime Minister to close down reporting of a matter of public interest.”

Bolt argues that while Gillard hasn’t been alleged to have done anything improper, it raises the problem of “her judgment in having a professional and romantic relationship with a man now exposed as a conman”.

Is it time for a media inquiry? Greens leader Bob Brown raised it in parliament again last week, but was barely heard over the Craig Thomson furore. Now the government has a fortnight to decide if it wants one, and as Lenore Taylor reports in The Sydney Morning Herald, Gillard’s decision on whether to investigate media ownership with particular ramifications for News Limited (which owns 70% of newspapers in this country) “will now be made against the backdrop of a bitter dispute”.

This is war, writes Laura Tingle in the Financial Review (one of the rare Fin Review articles let out from behind the paywall):

“Federal cabinet has held a lengthy discussion about “going to war” with the country’s largest media organisation …

… Events of the past few days have led cabinet ministers to believe what was once seen as isolated campaigning against it by The Australian or The Daily Telegraph has become an orchestrated campaign across mastheads and that the time has come to step up its counter-attack.”