Social networking sites such as Facebook and Twitter could face financial penalties under a Coalition plan to curb online bullying of children.

It has suggested setting up a children's e-safety commissioner with the power to monitor online content and seek the removal of harmful material.

However, given most large social media websites are based overseas and therefore not subject to Australian law, the scheme would rely on "cooperative regulation" between the government and affected companies.

The policy would require the websites to have a clear complaints process, but also allow the commissioner to issue a take-down notice if there was a clear problem with the online content which the complainant was unable to resolve.

"This is not about internet censorship, this is not about big brother," Opposition communications spokesman Malcolm Turnbull told reporters in Sydney.

"What this will do is give parents and teachers and carers and children the tools to ensure that bullying and harassment is no more acceptable on a smart phone than it is in a playground."

The Coalition plans to consult the affected websites in developing the idea, including what material would be considered likely to "cause harm to an Australian child".

If there was a breach of the cooperative regulations, the companies could face fines or other penalties.

But it is unclear whether companies such as Facebook or Twitter would be willing to sign up to such a scheme.

The Government and police have faced problems in dealing with Twitter in the past, accusing it of being arrogant and not responding to the legitimate concerns of Australian authorities.

The Coalition hopes its proposal would encourage social media companies to cooperate with local authorities and make it easier for cyber bullying to be removed from websites.

But Communications Minister Stephen Conroy says the Coalition has essentially adopted the Government's policy on cyber safety, pointing to a number of initiatives already underway.

He says a consultative working group has already been established, which includes representatives from the industry, law enforcement agencies, the Government and parents.

"The Government has established cooperative relationships with social networking sites, including Facebook, to ensure material that is offensive or breaks Australian law is removed as quickly as possible," Senator Conroy said in a statement.

"Twitter has also agreed to work with the AFP to help identify Twitter trolls who threaten people online.

"It is pleasing that the Coalition is adopting the Government's policies in this area. We look forward to this bipartisan support continuing for other important policies, like the National Broadband Network."

He says the Government has invested $128 million in cyber safety programs to help protect children over the past five years.