The government has come under fire for consulting betting, sport and media companies ahead of gambling harm advocates, as it prepares to respond to a plan that would ban all gambling ads.

Crossbenchers are furious over reports Labor will propose a cap on television ads instead of a total ban, with the Greens and independents warning anything short of a blanket ban could be amended by a hostile Senate.

The all-out ban was proposed by a bipartisan committee chaired by the former Labor MP Peta Murphy. That inquiry’s report, released in June 2023, called for a three-year phase-in period towards a total ban on gambling ads.

That proposal was greeted with calls by FreeTV Australia for the revenue impact to be “offset by reductions in the regulatory burdens on commercial broadcasters”, now understood to include a cut to spectrum fees.

On Monday Anthony Albanese responded to reports in Nine newspapers that Labor would propose a ban on television ads an hour either side of live sport and cap two gambling ads an hour on each channel until 10pm. “Don’t believe everything you read in the paper,” Albanese told reporters in Canberra. “We’ll announce what our preferred solution is when we announce it. I don’t comment on speculation.”

The reports were based on leaks from confidential consultations with gambling, sport and media companies, ahead of the communications minister, Michelle Rowland, taking the plan to cabinet.

Prof Samantha Thomas, a public health and gambling expert at Deakin University, said it was “unacceptable that big gambling companies and broadcasters appear to be calling the shots” on protecting communities from gambling harm. “The proposed reforms do not appear to be based on public health evidence, and the clear recommendations from experts that were provided to the [Murphy] inquiry,” Thomas said.

Although Labor’s plan could reportedly ban betting ads on social media and other digital platforms, Thomas said ads on television would still be a major problem.

“Public health experts and community organisations and children themselves have been very clear about the need for a complete ban on gambling advertising.

“The only groups that gambling marketing benefits are those that profit from it.”

The chief advocate at Alliance for Gambling Reform, Tim Costello, said “if the reports are true this decision just underlines the power of the gambling lobby and its allies and those interests have trumped the concerns of most Australians”.

The independent MP Kate Chaney, a committee member of the Murphy inquiry, told Radio National it “does seem” more consultations had taken place with companies “likely to lose out if there is a ban on gambling ads” and “not quite as much … on the other side, [with] all the people experiencing problems with gambling or who are sick of seeing ads wherever they look”.

“Partial bans don’t work, they simply move ads from one place to the other,” she said.

The Greens communications spokesperson, Sarah Hanson-Young, said: “Nothing less than a plan to eliminate all broadcast and online gambling advertising is good enough.

“It is only the corporate giants profiting off human suffering from the insidious gambling industry that support gambling ads.

“The Greens are ready to vote for a complete ban when parliament returns.”

Shayne Neumann, a Labor MP on the social policy and legal affairs committee which conducted the inquiry, told Guardian Australia that Murphy had done a “brilliant job”.

He said all of the inquiry’s recommendations were “very strong and well thought-through”.

Despite crossbench concern about a watered down system of caps, including from the independent senator David Pocock, Labor could seek to legislate with the Coalition, which proposed a ban on game-time ads during Peter Dutton’s 2023 budget reply.

On Sunday Dutton criticised Albanese for “umm-ing and ahh-ing over this issue” for the last two years.

Dutton said it was “inexplicable” media companies were required to sign non-disclosure agreements “to have this secrecy shrouding many of these discussions”.

“We want to see sensible policy in relation to advertising and gambling policy, but if the government has been at sixes and sevens as to what to do over the course of the last couple of years, and they’re just trying to clean barnacles off before they get to an election, I’m not sure we’re going to end up with the best policy.

“Let’s see what it is they propose, but I understand the angst of a lot of companies at the moment.”