Stronger action must be taken to protect children from online bullying and pornography, MPs have said.
Internet firms are also warned they may face prosecution for failing to show commitment to safeguarding youngsters.
The Commons culture, media and sport committee said efforts by the industry to eradicate child porn may prove "woefully insufficient".
It also said younger children were able to access social media sites owing to inadequate age verification processes.
The committee questioned whether police have sufficient resources to track down paedophiles online and said more funding should be made available if necessary.
It welcomed the commitment by industry body the Internet Watch Foundation (IWF) to "embark on proactive searching for online child abuse images".
But the MPs' report said the recent recruitment of seven extra full-time employees by the IWF to track down illegal images online "might prove woefully insufficient to achieve substantial progress towards... the eradication of child abuse images from the open internet".
In evidence to the committee the IWF said its "self-regulatory and multi-stakeholder" organisation was very effective at dealing with child sexual abuse content and added that it "remains committed as ever to continue developing and improving the fight against child sexual abuse content in the years to come."
The MPs called for an increase in prosecutions of legal adult pornography sites that do not take adequate steps to prevent children accessing them.
The committee said protections like those in place in the "real world", such as putting pornographic magazines on the top shelf of the newsagent and stopping children entering sex shops, had to be provided online.
Sites that are "particularly harmful" should be blocked altogether, the MPs proposed.
Among other recommendations, they said there was a "clear need to ensure that the police have adequate resources to track down and arrest online paedophiles in sufficient numbers to act as a meaningful deterrent to others".
Part of life
Jim Gamble, former head of the Child Exploitation and Online Protection centre, told the MPs each force should recruit 10 special constables dedicated to the work.
Conservative MP John Whittingdale, chair of the committee, said the current "relatively unfettered access" to adult pornography online represented a failure to protect children.
While more regulation is not necessary, he said "those who profit from the internet must demonstrate the utmost commitment to protecting children and should be prosecuted and penalised if they don't".
The committee also criticised age verification processes used by Twitter and Facebook, saying these were "at best flimsy" and led to younger children accessing their sites.
Mr Whittingdale added that bullying in the playground could merge with bullying on smartphones and tablets.
"Sometimes this ends with the tragedy of teenage suicide," he said. "It is just one reminder that staying safe off-line includes staying safe online too."