A new police Cyber Crime Unit is to be set up to protect Britain against the growing threat of attacks on the internet and in electronic communications.
Alongside the law enforcement unit, a new Joint Cyber Unit at the Government's GCHQ eavesdropping centre will develop the UK's military capabilities in cyberspace, Cabinet Office minister Francis Maude announced.
The teams form part of a £650 million Government drive to tackle what Mr Maude said was a "real and growing" threat to the UK's national interests from cyber attacks by organised criminals, terrorists, hostile states and "hacktivists".
The Cyber Crime Unit - already being nicknamed the iPlods - will be up and running as part of the UK-wide National Crime Agency by 2013, said Mr Maude in a written statement to Parliament.
He also announced plans for a voluntary code of conduct for internet service providers to help people recognise if their computers have been compromised and what they can do about it.
And he promised a "real and meaningful partnership between Government and the private sector to help improve cyber-security and make Britain a safe place to do business.
The role of the Centre for Protection of the National Infrastructure will be strengthened to cover a wider range of electronic communications systems.
Mr Maude said: "The growth of the internet has transformed our everyday lives. But with greater openness, interconnection and dependency comes greater vulnerability.
"The threat to our national security from cyber attacks is real and growing. Organised criminals, terrorists, hostile states, and 'hacktivists' are all seeking to exploit cyberspace to their own ends."
The Government's National Security Strategy last year classed cyber-security as one of the UK's top defence priorities, alongside terrorism, international military crises and natural disasters.
Official estimates suggest that online crime, including intellectual property theft such as music or film piracy, costs the UK economy billions of pounds a year.
Around 6% of the UK's national income is currently enabled by the internet, and this proportion is expected to grow, said Mr Maude.
"We must take steps to preserve this growth, by tackling cyber-crime and bolstering our defences, to ensure that confidence in the internet as a way of communicating and transacting remains," he said.
"The Government cannot tackle this challenge alone. The private sector - which owns, maintains and creates most of the very spaces we are seeking to defend - has a crucial role to play too."
A new national cyber security "hub" will allow Government and businesses to exchange information on threats and responses.
And the Cyber Crime Unit will expand the deployment of "cyber-specials" to make the skills and experience to deal with cyber-crime available to police forces across the country.