Culture Secretary Matt Hancock has pledged new laws to tackle the internet's "wild west" that will make Britain the "safest place in the world" to be online.
A new code of practice to tackle bullying, intimidating or humiliating online content could be included in the legislation.
Mr Hancock said: "Digital technology is overwhelmingly a force for good across the world and we must always champion innovation and change for the better.
"At the same time I have been clear that we have to address the wild west elements of the internet through legislation, in a way that supports innovation.
"We strongly support technology companies to start up and grow, and we want to work with them to keep our citizens safe."
He added: "People increasingly live their lives through online platforms so it's more important than ever that people are safe and parents can have confidence they can keep their children from harm.
"The measures we're taking forward today will help make sure children are protected online and balance the need for safety with the great freedoms the internet brings just as we have to strike this balance offline."
Mr Hancock said work with social media companies to protect users has seen some positive steps taken – but the performance of the industry overall has been mixed.
Proposals were outlined by the government last year on imposing an industry-wide levy on social media firms like Facebook and Twitter to fund measures tackling online harm.
It is understood the move will be subject to a further round of consultation with the sector and charities before any decision is made on pushing ahead with it.
The Department for Digital, Culture, Media and Sport and the Home Office are jointly working on a white paper that is expected to be published in the autumn.
More from Social Media
Barnardo's chief executive officer Javed Khan said: "We have long seen the harm that online can bring to children's lives, our own child sexual abuse services saw a 38% increase last year in children referred. Online can be a force for good but the ease of exploitation of children must be tackled.
"We urge government in the white paper to consider legislation that ends the era of technology self-regulation and puts children's safety at the heart of the online world. Taking action now is vital to protect the next generation of children."