The White House has 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 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 online.
In conjunction with the announcement, advertising networks associated with Google, Yahoo and Microsoft said they have agreed to act on "Do Not Track" technology for web browsers, something the Federal Trade Commission has been advocating since 2010.
"American consumers can't wait any longer for clear rules of the road that ensure their personal information is safe online," Mr Obama said in a statement.
"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 firms such as Google and Facebook have been accused of quietly tracking their customers' online activities and then using that data to generate advertising revenue.
A group of 36 state attorneys general sent a letter to Google yesterday with concerns about the search giant's plans to begin sharing users' personal information across Google products on March 1st without giving consumers an opt-in option.
"It rings hollow to call their ability to exit the Google products ecosystem a 'choice' in an internet economy where the clear majority of all internet users use - and frequently rely on - at least one Google product on a regular basis," the National Association of Attorneys General said in the letter.
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 US commerce department will work with companies and privacy advocates to develop "enforceable" privacy policies based on the bill of rights, said the White House.
Facebook's chief privacy officer, Erin Egan, said the social networking site looked forward to helping develop enforceable codes of conduct that would balance "the public's demand for new ways to interact and share”.
The Digital Advertising Alliance, a self-regulatory body representing media and marketing trade associations, said it would immediately begin work to add tools to browsers that 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 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.
Marc Rotenberg, executive director of the Electronic Privacy Information Center, called Mr Obama's privacy rights statement "the clearest articulation of the right to privacy” by a US president in history.
"But there are real concerns about implementation and enforcement," he added.
Privacy advocate Jeffrey Chester cautioned against letting industry hijack the do-not-track system. "The new... scheme will enable companies to continue to collect profiling data on users, and merely prevent the delivery of targeted ads," he said.
Reuters