Police forces and councils who want to set up CCTV systems will have to be open and clear about what they will be used for and why under Home Office plans.
The plans for a new code of conduct come after West Midlands Police apologised last year over a controversial CCTV scheme which saw more than 200 surveillance cameras installed in two largely Muslim neighbourhoods.
The code may also say how long data, including images from automatic number plate recognition (ANPR) cameras, such as those which helped track the killers of Pc Sharon Beshenivsky in Bradford in November 2005, should be retained.
"ANPR differs significantly from CCTV, because ANPR data is more easily searchable," the Home Office said.
"Accordingly, its longer retention can be particularly helpful in police investigations although there should be public transparency in relation to the length of any retention periods."
It added that data used for a particular purpose "should not be kept for longer than is necessary".
Crime prevention minister James Brokenshire said: "CCTV and ANPR systems play a vital role in the prevention and detection of crime.
"However it is important they are used in a way that does not invade law-abiding people's privacy or undermine the public's confidence in them.
"That's why we are establishing this code and that's why we are asking the public what they think should be in it."
A new commissioner will also be appointed to monitor the use of the code, he said.
Launching a 12-week consultation, the Home Office said: "The aim should be to enable any individual wishing to know more about an overt surveillance camera to be able to obtain that information easily and readily, whilst the personal data itself is appropriately safeguarded.
"Anyone considering the use of such technology should first undertake a thorough assessment of the purpose, likely value, and wider impact of such a course of action and determine in the light of that whether or not to proceed.
"Good practice suggests that an important way of commanding public confidence is by ensuring transparency of process in the ownership, purpose and use of surveillance cameras."
Last September, West Midlands Police Chief Constable Chris Sims said he was "deeply sorry" that his force got the balance between counter-terrorism and intrusion into people's lives "so wrong" in what was known as "Project Champion".
The cameras, some of which were hidden, sparked anger from civil liberties campaigners and residents in Sparkbrook and Washwood Heath in Birmingham.
Mr Sims said there were "serious shortcomings" in the force's management of the scheme, which was organised by the Safer Birmingham Partnership, an initiative including West Midlands Police, Birmingham City Council and other agencies.
The partnership has acknowledged it should have been more explicit about the role of the city's counter-terrorism unit in setting up the network of 218 cameras.
The number plate recognition and CCTV cameras were financed under a counter-terrorism initiative but were marketed to locals as a general crime prevention measure.