The White House on Thursday proposed a "bill of rights" that would give consumers greater online privacy protection and could eventually give the government greater powers to police Internet firms such as Google Inc. and Facebook.
While the privacy bill of rights does not impose any immediate new obligations on online companies, President Barack Obama said it was part of a broader plan to give Americans more control over how their personal data was used on the Internet.
"American consumers can't wait any longer for clear rules of the road that ensure their personal information is safe online," said Mr. Obama.
"As the Internet evolves, consumer trust is essential for the continued growth of the digital economy. That's why an online privacy Bill of Rights is so important."
Internet giants such as Google and Facebook have been accused of quietly tracking their customers' online activities and then using that data to generate advertising revenue.
Lawmakers have expressed an interest in cracking down on online tracking, but have done little to curtail the practice.
Internet companies have tried to get ahead of reforms by adopting privacy policies, but have still come under fire from Congress and consumer groups for not being upfront about how they use information on users' online activities.
The U.S. Commerce Department will work with companies and privacy advocates to develop "enforceable" privacy policies based on the bill of rights, said the White House.
While advertising networks associated with Internet firms including Google, Yahoo Inc. and Microsoft Corp. have agreed to act on "Do Not Track" technology on web browsers that make it easier for consumers to control tracking.
The Digital Advertising Alliance, a self-regulatory body representing media and marketing trade associations, said on Thursday it would immediately begin work to add these browser-based choices to the set of tools consumers can use to express their preferences for data collection.
Stu Ingis, the group's general counsel, said he expected within nine months for browsers to include a simple, clear mechanism for consumers to opt-out of all data collection.
The administration said it was highlighting this action by online advertisers as an example of the kind of progress that can be made through voluntary action.
Mr. Obama's announcement comes as he hones his strategy for winning re-election in November. Mr. Obama is holding himself up as a champion of everday Americans who does not impede the business community's contribution to economic growth.
The planned privacy bill of rights consists of seven basic protections consumers should expect from companies.
Consumers would have control over the kind of data companies collect, companies must be transparent about data usage plans and respect the context in which it is provided and disclosed. Companies would have to ensure secure and responsible handling of the data and be accountable for strong privacy measures.
The bill of rights also calls for reasonable limits on the personal data that online companies can try to collect and retain and the ability of consumers to access and ensure the accuracy of their own data.
While companies can voluntarily choose whether to adopt these principles, those that do commit could face enforcement action for straying from the principles.
Federal Trade Commission chairman Jon Leibowitz said a failure to meet privacy commitments once adopted could be a deceptive act or practice, warranting FTC fines or other action.
Still, he expected companies to come on board as strong privacy protections encourage trust in Internet commerce. "That in turn fuels growth of the cyber economy and all other uses of the Internet," Mr. Leibowitz said.
The FTC issued a draft privacy report in December 2010 that called for more privacy by design, choice and transparency. A final report is expected soon.