Six in ten people told a consultation that they had witnessed inappropriate or harmful content online, while four in ten people had experienced online abuse.

Ministers are examining whether the new laws could force social media companies to provide greater detail about any offensive content that is removed, or even require them to follow a legally enforceable code of practice.

Online companies could be forced to follow advertising rules that apply to traditional media stop certain adverts being targeted at children.

Matt Hancock, the Culture secretary, said: “Digital technology is overwhelmingly a force for good across the world and we must always champion innovation and change for the better.

“At the same time I have been clear that we have to address the Wild West elements of the Internet through legislation, in a way that supports innovation.

“We strongly support technology companies to start up and grow, and we want to work with them to keep our citizens safe.

“People increasingly live their lives through online platforms so it’s more important than ever that people are safe and parents can have confidence they can keep their children from harm.

“The measures we’re taking forward today will help make sure children are protected online and balance the need for safety with the great freedoms the internet brings just as we have to strike this balance offline.”

Last month The Sunday Telegraph disclosed how ministers were considering laws to punish social media firms that allow flagrant breaches of age limits, accusing firms such as Facebook of "turning a blind eye to a generation of children being exposed to harm".

Jeremy Hunt, the Health secretary, said the failure of the firms to prevent young children using social media was "unacceptable and irresponsible," and said legislation may now be introduced in an effort to protect children from emotional damage.

The Culture department and the Home Office will jointly publish a White Paper later this year, setting out legislation to be brought forward that tackles a range of both legal and illegal harms, from cyberbullying to online child sexual exploitation.

Sajid Javid, the Home Secretary, added: “Criminals are using the internet to further their exploitation and abuse of children, while terrorists are abusing these platforms to recruit people and incite atrocities.

“We need to protect our communities from these heinous crimes and vile propaganda and that is why this Government has been taking the lead on this issue.

“But more needs to be done and this is why we will continue to work with the companies and the public to do everything we can to stop the misuse of these platforms. Only by working together can we defeat those who seek to do us harm.”