The Office of Fair Trading (OFT) is to study how consumers can be more confident and better protected while shopping online.
The OFT says more than 20 million Britons shopped online last year
The OFT, Britain's consumer affairs watchdog, said it would spend the next six months talking with consumer groups, firms and other public bodies.
With the UK online shopping market now worth £21.4bn a year, it says people are unsure of all their rights.
It adds that some online sites are not aware of their obligations to buyers.
Regarding this, the OFT stresses the Distance Selling Regulations, which provide additional protection for shoppers when buying online.
It adds that more needs to be done to address consumer concerns about privacy and security.
'Shopping with confidence'
"The internet has added a welcome new dimension to competition in the economy, as well as providing convenience for shoppers and new opportunities to compare prices and find new products," said OFT chief executive John Fingleton.
"However, if online shopping is to continue to flourish, the awareness and the protection of consumers' rights needs to improve.
"The OFT is committed to working with businesses, consumer groups and other bodies to make sure that consumers can shop with confidence online."
It estimates that more than 20 million Britons shopped online last year, with nearly a third of them spending more than £1,000.