The Liberal Democrats want to introduce a Digital Bill of Rights that would see data thieves get prison sentences.
The party would seek to make the bill an Act of Parliament if it comes to power as part of a coalition after May's general election.
Under its Digital Bill of Rights, executives at companies guilty of large scale data theft, or illegally selling personal data to third parties, would get prison sentences.
It would also stop the government from weakening cyber security and encryption measures used by British firms.
This comes after Prime Minister David Cameron suggested he'd ban the use of encrypted messaging services like Whatsapp, a measure the Lib Dems said would be "catastrophic" for British exports.
The party's proposed bill would give more powers to the Information Commissioner's Office (ICO) to levy heavier punishments against government bodies failing to protect user data, after it was discovered that NHS patient records were sold to insurers in February 2014.
Lib Dems leader Nick Clegg said: "The way in which we work, socialise, buy products and use services has changed at lightning speed since the digital revolution.
"However government and politicians have responded at snail's pace, and failed to ensure the rights of consumers, businesses, journalists and children are protected in the online world.
"Our Digital Rights Bill will finally enshrine into law our rights as citizens of this country to privacy, to stop information about us being abused online, and to protect our right to freedom of speech."
Clegg's bill would protect free speech online, safeguarding journalists and bloggers' ability to air their own views, while any inaccurate or defamatory information would have to be corrected by law.
The party has started a public consultation on the bill ahead of the general election, and if successful plans to introduce it within the first six months of the next Parliament.
