This article explores the emergence of the concept of ‘media literacy’ within UK communications policy, focusing particularly on the period leading up to the 2003 Communications Act. While broadly deregulatory in intention, the Act gave the new media regulator, Ofcom, a duty to ‘promote media literacy’. This article explores the origins of this theme, the different discourses and definitions in play, and the roles of the various agents involved. It argues that there were some significant strategic shifts in the debates around media literacy, which reflect broader tensions between neoliberal and social-democratic tendencies within New Labour’s communications policy. The article suggests that this resulted in a lack of clarity about the definition of media literacy, the scope and nature of Ofcom’s role, and the means by which the policy might be implemented – problems that partly account for the subsequent demise (or significant redefinition) of media literacy as a theme within communications policy towards the end of the decade.