Workers who spend time on sites such as Facebook could be costing firms over £130m a day, a study has calculated.
For some employees Facebook is part of their working day
According to employment law firm Peninsula, 233 million hours are lost every month as a result of employees "wasting time" on social networking.
The study - based on a survey of 3,500 UK companies - concluded that businesses need to take firm action on the use of social networks at work.
Some firms have already banned employees from accessing Facebook.
Mike Huss, director of employment law at Peninsula called on all firms to block access to sites such as Facebook.
He asked: "Why should employers allow their workers to waste two hours a day on Facebook when they are being paid to do a job?"
He said that loss of productivity was proving a "major headache" for firms.
"The figures that we have calculated are minimums and it's a problem that I foresee will escalate," he said.
While some firms have embraced Facebook as a motivational tool, others have cracked down.
Last month, Kent County Council (KCC) banned workers from using Facebook in an effort to crack down on "time-wasting".
The TUC said last months that all-out bans were not the answer and that firms should draw up guidelines instead.
The organisation said employers were entitled to stop people using the sites during the working day but that staff should be able to use their time during lunch breaks to contact friends on sites such as Facebook, MySpace and Bebo.
Mr Huss is not convinced such an approach will work in the long-term.
"If a company can police the system, and only allow limited access during lunch breaks then that is fine. However I think it would be easier and less expensive to ban access altogether," he said.
Meanwhile, scientists have cast doubt on how big a part social networking sites such as Facebook and MySpace can play in people's offline social lives.
Dr Will Reader, a researcher at Sheffield Hallam University, has been conducting research into the new types of friendships being fostered online.
Presenting his findings at the BA (British Association) Festival of Science at York University, he said that the huge contact lists of some members of Facebook and MySpace belied their real social status.
"Although the number of friends people have on these sites can be massive, the number of close friends is approximately the same as in the face-to-face real world contact," he told delegates at the festival.