Hungarian reporters who write "unbalanced" or "offensive" stories face fines from the government, under a law that Parliament passed Dec. 21.
The government is now empowered to monitor newspapers, TV and other media and fine journalists for improper coverage. Internet bloggers must register with the government.
Anna Nagy, government spokesperson, told the Wall Street Journal that critics of the new law should withhold judgment until there are instances of the law being enforced.
Werner Hoyer, deputy foreign minister of Germany, said the "slightest suspicion that press freedom is being controlled in a European Union member state is cause for great concern."
An Hungarian official will be president of the EU for six months starting in January.
The country's debt is rated just above junk-bond levels by Fitch, S&P and Moody's.