Governments should create a list of all organisations that track internet use and produce an annual report on internet surveillance, the European Parliament has said.
The Parliament also said that users' online activity should not be monitored in the fight against piracy.
Members of the European Parliament (MEPs) voted by a huge majority to adopt a policy statement on the freedoms citizens do and should have online. The statement calls on the European Commission and national governments to take action to protect free speech and halt the intrusion of criminals and industry into private communications.
"[We] urge the Member States to identify all entities which use Net Surveillance and to draw up publicly accessible annual reports on Net Surveillance ensuring legality, proportionality and transparency," said the statement.
MEPs said that governments should be aware of the problems that might arise as people's internet traffic is increasingly monitored for commercial purposes.
"[Governments should] recognise the danger of certain forms of Internet surveillance and control aimed also at tracking every 'digital' step of an individual, with the aim of providing a profile of the user and of assigning 'scores';" it said.
They should "make clear the fact that such techniques should always be assessed in terms of their necessity and their proportionality in the light of the objectives they aim to achieve; [and] emphasise also the need for an enhanced awareness and informed consent of users with respect to their e-activities involving the sharing of personal data."
The Parliament said that when it comes to ensuring that intellectual property rights are respected, Governments should make sure that the interests of business do not trump the rights of individuals.
In relation to IP rights they should be prohibiting "the systematic monitoring and surveillance of all users' activities on the Internet, and ensuring that the penalties are proportionate to the infringements committed," the resolution said.
"Within this context, [they should] also respect the freedom of expression and association of individual users and combat the incentives for cyber-violations of intellectual property rights, including certain excessive access restrictions placed by intellectual property holders themselves," it said.
The Parliament was concerned about the rights that internet users might be expected to give up in return for using online services. It said that governments should set limits on how much their privacy can be invaded in return for internet services.
"[Governments should] examine and prescribe limits to the 'consent' that can be requested of and extracted from users, whether by governments or by private companies, to relinquish part of their privacy, as there is a clear imbalance of negotiating power and of knowledge between individual users and such institutions," it said.
The resolution also called on governments to step up the protection of children from sexual predators and called on the European Commission to produce a policy to prevent cybercrime and identity theft.