The Liberal Democrats have vowed to introduce a Bill that protects people's rights online if they are part of another coalition government.
The bill would protect personal information online and impose tougher penalties on theft and illegal sale of data.
The leader of the Lib Dems said that they would introduce the Digital Bill of Rights within the first six months of the next parliament.
Under the new law, website owners would face prison sentences if they sold personal data to third parties.
In addition, the Information Commissioner, the regulator responsible for data protection and privacy, would have greater powers to investigate companies, and consumers would have the right to claim compensation if they sign up to misleading or unreadable terms and conditions.
Online consumer protection
Websites would also be forced to correct inaccurate or defamatory information about members of the public, while the Government's responsibility to defend the rights of both journalists and citizen journalists would be enshrined in law, the Independent reported.
Deputy Prime Minister Clegg said: "The way in which we work, socialise, buy products and use services has changed at lightning speed since the digital revolution.
"However, government and politicians have responded at snail's pace, with a poor understanding of new technology and the impact it is having on our lives.
"We need to ensure that consumers, businesses, journalists and our children are protected in the online world."
The Lib Dems have also launched a public consultation the party's website which seeks to find out what else people want to be included in the bill.
The proposed bill comes following a series of news reports in the Daily Mail that revealed private companies have been selling the details of people's pension pots, in breach of data protection laws.