The UK government has cleared the way for Rupert Murdoch’s 21st Century Fox to buy Sky on the condition it sells Sky News to another organisation.

It also approved a rival bid for the British broadcaster from US media giant Comcast, setting up a multibillion-pound bidding war.

Fox is attempting to buy the 61% of Sky that it does not already own, in a deal valuing the company at £18.5bn, but the bid has been complicated by concerns that it would leave Murdoch with too much control over the UK media.

Comcast, which owns US TV network NBC and Universal Studios, made a rival bid earlier this year that valued Sky at £22bn.

The culture secretary, Matt Hancock, approved the Comcast deal in a statement in the House of Commons on Tuesday afternoon. He also indicated he will also approve the Murdoch deal if Sky News is offloaded to an appropriate buyer, who will guarantee its independence and fund it for 10 years, in order to avoid excessive influence by the the mogul’s family over the UK news business.

Disney has already offered to buy Sky News in order to clear competition concerns as part of its broader bid for many of Murdoch’s media assets. Hancock suggested this offer is likely to meet his standards and would allow Murdoch’s bid to be approved later this month, meaning a bidding war for Sky is “on the horizon”.

Murdoch’s 21st Century Fox said Hancock’s statement meant it was “confident that we will reach a final decision clearing our transaction”.

The deal has left Sky News employees nervous about their futures but in an email to staff channel boss John Ryley noted that both bids contained “commitments to guarantee the funding and editorial independence of Sky News”.

“I will update as and when there are further developments but in the meantime, all we can do is to continue the great job we’ve been doing and concentrate on what we do best which is making the best news content for mobile, television and radio,” he said.

The Labour deputy leader, Tom Watson, said Sky News has “always been a beacon for independent and rigorous journalism” and said his priority is “ensuring Sky News thrives going forward”.

He warned that if Sky News is sold to Disney – and Disney’s bid for overall control of Fox is unsuccessful – it would leave the 24-hour news channel “isolated from Sky and owned by a foreign company with few news interests in the UK”.

The Comcast bid for Sky – how it compares to Disney’s

The takeover bids are part of a complex web of global media deals, with giant companies competing to buy smaller businesses in the hope of securing their long-term future in the face of challenges from streaming services such as Amazon and Netflix.

The Competition and Markets Authority provisionally blocked Fox’s takeover bid in January due to fears it would raise competition concerns and was therefore not in the public interest. Fox has since been attempting to address the concerns by tabling a series of remedies.

Murdoch’s last attempt to take full control of Sky was abandoned in 2011, amid the phone-hacking scandal at his News of the World newspaper.

Even if Murdoch’s takeover is successful this time around it is unlikely the 87-year-old will retain control of Sky in the long term, as he is looking to sell most of his broadcast and film assets.

Disney has already tabled a £39bn offer to buy assets including Fox’s TV production unit, the 20th Century Fox film studio, and its stake in Sky.

To raise the odds further, Comcast recently announced it is planning to outbid Disney for the same Fox assets, as part of its battle with Disney to control the future of the media industry.

Under both deals Murdoch would be left owning a much smaller Fox business which would control a TV network and news channels including the rightwing Fox News, in addition to Dow Jones which runs the Wall Street Journal and publisher HarperCollins.

In the UK he would be left with his News UK business, which owns the Sun and the Times newspapers.