The internet has become the "playground of criminals" and the government has to act to stop it being seen as a lawless "Wild West", an important parliamentary group has warned.

The internet has become the "playground of criminals" and the government has to act to stop it being seen as a lawless "Wild West", an important parliamentary group has warned.

The House of Lords science and technology committee says that more needs to be done as people are being put off using the internet because of safety fears.

Its new report points to dangers from losing money to identity theft which can even lead to them being accused of crimes they did not commit, as well as online bullying of children and "grooming" by paedophiles using the internet.

It says software firms should be forced to pay up if their customers fall victim to e-criminals because of security flaws. It wants the government to create a central system for reporting e-crime, establish a "kite mark" standard for secure internet services, and give the police more resources to tackle the problem.

Once viruses were mostly created to bring fame and attention to their creator - now they mostly infect computers to steal financial information.

Everyone who uses a computer has seen the e-mails pretending to be from a bank, containing an urgent message about the account being suspended, or querying a payment.

Those who click on the link in the e-mail are taken to a fraudulent website which records their bank details, allowing the fraudsters to take out money themselves.

There were 1,500 versions of this scam in the UK in September last year alone, and millions of people have been misled.

The report says the government's insistence that it is up to the individual to keep themselves safe is worsening the perception that the internet is a "Wild West".

Chairman Lord Broers said: "It seems that the internet is increasingly perceived as a sort of 'Wild West', outside the law. People are said to fear e-crime more than mugging. That needs to change, or else confidence in the internet could be destroyed.

"We feel many of the organisations profiting from internet services now need to take their share of the responsibility. That includes the IT industry and the software vendors, the banks and internet traders, and the internet service providers."

A spokesman from APACS, the UK payments association, said: "Banks believe they have an excellent track record of taking their customers' security seriously.

"Over the last three years since these online threats emerged, the industry has been extremely proactive in raising awareness amongst its customers and educating them on the need to ensure the security of their computers.

"Individual banks have published online guarantees stating that innocent victims of online banking fraud can expect to be reimbursed, providing they have taken reasonable care."