Spending on online advertising overtook that of mainstream TV in the UK last year, growing 40 percent to 2.8 billion and accounting for 19 per cent of all ads, said Ofcom.
In its annual report on the 51 billion communications industry, the watchdog found that Britons spent four times as much time on computers, or 24 minutes a day, and twice as much time on mobile phones in 2007 as in 2002.
Average household spending on communications fell slightly, however, as bundled services and broadband bargains drove down prices, while more consumers shopped around and switched providers to get better deals.
"We are spending more and more time with our communications devices but spending less on them," Ofcom's strategy and market development partner Peter Phillips said in the report, which covers TV, internet, mobile and fixed-line telephony and radio.
Online advertising spending was dominated by paid-for search, in which sponsored links appear as internet search results. Paid-for search accounted for 1.6 billion pounds, with the rest split equally between display and classified ads.
According to Ofcom's comparative figures for 2006, the latest available, internet advertising in the UK generated more revenue per head - 33 pounds - than in any other G7 country.
TV advertising was flat at 3.5 billion, with digital TV channels, mainly those owned by public service broadcasters, gaining in share to make up about one-third of TV ad sales.
"We may not yet have felt the full impact of the economic downturn on consumer and advertiser spend," Ofcom said. "While television advertiser revenue has remained relatively steady in nominal terms, future stability cannot be taken for granted."
The proportion of those with an Internet connection watching TV online more than doubled to 17 per cent, helped by the launch of the BBC's iPlayer catch-up service.
Among households with access to the internet, 32 per cent watched video clips on sites such as Google's YouTube, or webcasts, up from 21 per cent in 2006.
Broadband penetration reached 58 percent of British households, up from 52 percent the previous year.
By the end of 2007, Britain's population of 60 million had almost 74 million mobile connections, and Britons spent on average 10 minutes a day talking and texting on their cellphones, double the time they spent in 2002.
The average time spent talking on landline phones slipped to 14 minutes a day from 15, and consumer use of VoIP Internet calling services such as Skype dwindled as the cost of making landline calls continued to fall.
Overall telecoms revenue rose to 38.8 billion from 37.3 billion in 2006, but average household spending on all communications slipped 1.6 per cent to 93.63 per month, despite a 4.1 per cent rise the UK's retail price index.
Mobile broadband usage surged, driven by sales of dongles - small USB-like devices that connect laptops to the Web.
Dongle sales nearly doubled to 133,000 a month between February and June 2008, and about 2 million adults said they had accessed the internet while on the move.
More than one in 10 mobile phone users accessed the Internet on their cellphone as the number of third-generation (3G) connections leapt 60 percent to 12.5 million.
When considering what communications device to buy, only 39 per cent said they considered the effect on the environment, despite the fact that seven out of 10 respondents said they cared about environmental matters.
More than half of those questioned admitted to leaving set-top boxes on standby. Ofcom said the power used to keep all the UK's set-top boxes on standby for a year would be enough to make nearly 80 billion cups of tea.
