A wide-ranging clampdown on the sources of junk mail, cold-calling and spam email was proposed by an official report today.
The review - commissioned by Prime Minister Gordon Brown last year - recommended making it easier for the public to keep track of who holds personal information about them.
The Information Commissioner Richard Thomas and director of the Wellcome Trust Dr Mark Walport said ministers should launch an inquiry into firms which gather personal information and sell it on.
They also recommended banning town halls from selling "edited" versions of the electoral roll.
Mr Thomas admitted this proposal amounted to a return to the pre-internet age, with copies of the electoral roll only available in public libraries.
"We feel that selling the edited register is an unsatisfactory way for local authorities to treat personal information," said the report.
"It sends a particularly poor message to the public that personal information collected for something as vital as participation in the democratic process can be sold to 'anyone for any purpose'."
The report said the public should have a right to know with whom a company shares, exchanges or sells information.
"Opt outs" on the internet should be made clearer, it added.
Such moves would make it far easier for the public to control who knows what, and limit the availability of contact details used by cold-callers and junk mailers.
It also said the Information Commissioner should have the power to impose massive fines against companies or government bodies which deliberately or recklessly breach privacy rules.
The 75-page report called for fines similar to those which can be imposed by the Financial Services Authority, which can run into millions.
Internet sites which gather publicly-available details about individuals from electoral rolls, company registers, telephone directories and websites presented a "worrying threat to privacy", it added.
The Government should review the operation of these services and consider regulating them, the authors said.
Mr Thomas said the amount of personal information on social networking sites such as Facebook and Bebo was still a problem.
He was working with companies to seek improvements but there was still a lot to be done, he added.
Dr Walport said: "Many individuals are posting more and more personal information on the web and of course web technology means that it can be aggregated in a very powerful way."
The report also recommended:
* An immediate review of the "often misunderstood" Data Protection Act;
* Organisations should draw up privacy policies setting out what personal information they hold, how they use it and who can access it;
* The Information Commissioner should receive new powers to gain entry to premises to inspect their privacy and data-handling measures, using a court order and the use of force if necessary.
Mr Thomas said: "There is undoubtedly a lot of confusion and uncertainty, particularly about the law.
"People can sometimes hide behind the law and there is a significant lack of public trust in data-sharing.
"If there is to be sharing it's got to be absolutely crystal clear who is responsible for getting it right."
Many organisations simply collect too much data, the authors added.
"When you check into a hotel they don't need to know your name and address, they just need to know that the bill will be paid," Dr Walport said.
A Ministry of Justice spokeswoman said: "We agree that measures need to be taken to increase public trust and confidence in the handling and processing of personal data by the public and private sectors.
"The Ministry of Justice is already working on possible amendments to the powers available to the Information Commissioner and the funding arrangements for his office to support the exercise of any new powers.
"We will assess the other recommendations in the report in further detail and issue a more detailed statement once we have had time to fully consider the implications and costs of bringing about such changes."
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