HERE is a tease you might have expected to read on 'Page Six', the inimitable gossip spread that appears daily in Rupert Murdoch's New York Post.

"Which famously foppish, fedora-wearing gossip writer has been caught on videotape trying to extort ocean-loads of dollars from a California supermarket mogul in exchange for promising to keep his name out of Manhattan's most powerful gossip sheet?"

Except, as events of the last week have rendered obvious, you will never read it there, because it refers to a major egg-onface debacle for said newspaper.

It would have been the kind of "blind item" that Page Six specialises in. As in: "Which Botoxed actress was seen canoodling [a favourite Page Six euphemism] with a married baseball star at Bungalow 8?" Or - and this one appeared for real on Monday - "Which rocker is back on drugs?"

We don't know which rocker. However, there can be barely be a literate soul left in New York who does not by now know exactly who the fedora fellow is. Jared Paul Stern has for many years cast himself as one of Manhattan's most ubiquitous and diligent gossip hounds. And, although he operates as a freelance, his mainstay has long been as a contributor to the Post's Page Six.

But the world of late-night clubbing and of schmoozing with the famous, rich Post's arch rival in New York, the Daily News, ran a frontpage story about him and the supermarket man. Not only has Stern been suspended, he is also the subject of a full-blown federal investigation.

The allegation, which Stern denies, does indeed seem shocking, even for the most jaded in the celebrity-chronicling community. And while it threatens disaster for the writer, who has taken shelter for now in his home in the Catskill Mountains in upstate New York, it is hardly less mortifying for his bosses at Page Six and indeed for Murdoch.

The other man is Ron Burkle, a normally intensely private business baron, famous not just for his chain of California supermarkets but also for his closeness to the former president Bill Clinton. (And, thanks largely to Page Six, for the often messy circumstances of a recent divorce. ) New chapters of the relationship between Stern and Burkle emerge almost daily. At the crux of the story is a meeting we know took place between them in Burkle's Manhattan loft on 22 March.

The encounter was videotaped by Burkle's party and that is the tape now in the hands of the FBI.

The issue at hand was Burkle's longstanding anger with what he said had been consistently inaccurate reporting about him by Page Six. Several items had appeared over the preceding months, including a blind one that asked which "babe-loving billionaire" had been checking the ages of "young models he invites on his private jet". Burkle had been convinced that he was the billionaire.

Stern came to the meeting having already advertised to Burkle, both in an earlier encounter last summer and in several emails exchanged with a member of his entourage, his willingness to police what went into Page Six about him in future. One of the emails, sent on 14 March, said: "I understand Ron is upset about the press he's been getting. I think I can help him get the situation under control." On the tape, Stern is purported to spell out his offer to guarantee various "levels of protection" to the billionaire.

Burkle is seen and heard asking how much Stern wants in return. And Stern conjures a sum in excess of $200,000 - $100,000 up front and $10,000 in additional monthly payments. Portions of the tape have been acquired by other news organisations such as the New York Times.

Last week Burkle also spelt out the charges in a signed article in the Wall Street Journal. "Two weeks ago, " it began, "a New York Post writer made me an astonishing offer. If I forked over $200,000 or so, he promised the Post's Page Six gossip pages would stop publishing false items about my personal life."

War has broken out between the two.

Stern acknowledges a "a lack of judgement" in his dealings with Burkle. However, he claims to have been set up. If the comments on the tape were seen in their context, he says, it would be clear that he was seeking an investment in his fledgling clothing label, Skull and Bones. "It was a total set up, a total smear, a trap and a plot by this guy from last summer, " he insisted to the New York Observer. "He set up a meeting with me last summer to talk about investing in the clothing company.

I was kind of giving him advice and telling him how things work."

The saga has meanwhile led to a sharp escalation in another war that has been under way for years - that between the Post and the Daily News. The latter has barely been able to contain its glee at the grief being visited upon its rival and on Page Six in particular. The Daily News, owned by New York property tycoon Mort Zuckerman, has been relentless in his trumpeting of the Stern-Burkle conflagration.

Murdoch first purchased the Post in 1976 but sold it in 1988 when he fell foul of media ownership regulations that barred cross-ownership of newspapers and television stations. But in 1993, when the Post was on its last legs, Murdoch won a waiver and bought the newspaper back. It remains a minor planet in Murdoch's $45bn media constellation and loses money for him. But the Post is his only American newspaper and he is furiously supportive of it.

Page Six has long been the newspaper's most vaunted asset. One media analyst suggests that if Page Six was dropped, more than a quarter of its readers would flee. Page Six - which ceased appearing on the actual sixth page of the paper years ago and has since just become a brand name - is a must-read for American celebrities, for their armies of publicity handlers and anyone else who likes to devour A-list gossip, which explains the joy over at the News at this recent scandal. Its writers have sought to exploit the story further, highlighting some other dubious practices at Page Six. They have reported, for instance, that longtime editor Richard Johnson accepted a $50,000 allexpenses-paid bachelor jaunt to Mexico from the founder of the Girls Gone Wild series of soft-porn videos, Joe Francis. The News also pointed out that Francis has received nothing but praise from Page Six.

How this story progresses is still anyone's guess. No charges have been filed against Stern. If he escapes prosecution, Stern may even come out of the whole fracas twirling his fedora in delight. (He reports that internet orders for his fashion line have spiked handily over the past week. ) However, one collateral victim in the whole affair, according to Daily Variety, may be the New York Times' daily gossip column, which began three years ago under the name ?Boldface'. Truth is, Boldface always seemed tepid alongside the juicy tittle-tattle of Page Six. But then the Times could never justify Page Six's tactics.

It is those tactics that are also coming under scrutiny. If the allegations concerning Stern are ever proved, few would disagree that he crossed an ethical line.

The Stern affair has shed an unflattering light on the accepted modus operandi for gossip-gatherers in New York and beyond. Sometimes the bargains are as crass as a five-star hotel suite. But more subtle agreements are struck all the time, both to protect against bad press and, just as often, to generate good press. Stern purportedly supplies his own intriguing example on the videotape. He points to Harvey Weinstein, the head of the Weinstein Company and former head of Miramax and Miramax Books. Stern told Burkle that an accord had been reached whereby Weinstein agreed to give book publishing deals to Page Six writers in exchange for kind coverage. This has been dismissed by a Weinstein spokesperson.

Will this whole saga affect the gossip pages? "Temporarily, " the leading Hollywood publicist Pat Kingsley suggested to Variety. "Remember when Princess Di was killed and they said this is the end of paparazzi? How long did that last?"