The founder of social networking site Facebook Mark Zuckerberg has apologised to users for the way it launched a social advertising system.
Facebook has 50 million users worldwide
Called Beacon, the system tracks web shopping on partner sites outside Facebook and then sells adverts to the social network based on purchases.
After complaints the site was invading privacy, Facebook changed Beacon from an opt-out system to opt in.
Mr Zuckerberg has said users can now switch off Beacon completely.
Meanwhile, the UK's National Consumer Council (NCC) has warned that children need to be better protected from "opaque commercial practices" on some of the most popular websites.
The council has said children are being exposed to advertising on websites that they would not see around their favourite TV programmes because of strict regulation.
A quarter of adverts on children's best-loved sites are aimed at adults - such as gambling and dating services, the NCC found.
"Parents should be aware that the internet is highly commercial. Every hour that a child spends in front of the computer is like letting them run loose in a shopping centre," said Ed Mayo, chief executive of the NCC.
Facebook is one of the most popular social networks in the world, and has more than 50 million members.
In a statement posted on the Facebook blog, Mr Zuckerberg said: "We've made a lot of mistakes building this feature, but we've made even more with how we've handled them.
"We simply did a bad job with this release, and I apologise for it."
He added: "I'm not proud of the way we've handled this situation and I know we can do better."
More than 50,000 Facebook users signed a petition complaining about Beacon. Initially, Facebook said it would not offer users a universal opt-out from Beacon.
The company relented after concerted pressure from privacy advocates and leading technology writers in the blogosphere.
But some writers have questioned whether the switch-off option goes far enough.
Om Malik has questioned if turning off Beacon merely prevents advertisers and Facebook "storing" purchase information.
If so, he wrote on his website, information from purchases could still be swapped in real time.
The Facebook apology highlights a growing debate surrounding privacy and advertising in the online space.
Many privacy advocates are concerned about the use of "web beacons" to monitor the surfing habits of users and to what use that information is put by websites and advertisers.
Facebook's system raised concern with some users because it meant friends could see which websites and which products they were buying online.
The adverts were presented as personal recommendations to users because people in their friends' list were, in effect, endorsing brands and products by purchasing items.
More than 40 companies, including Coca Cola, Blockbuster and Sony Pictures, signed up to Beacon when launched.
Nate Elliott, a senior analyst at Jupiter Research, said Facebook had "taken things too far".
"The controversy shows that consumers want to be in control of how their information is to be used. These are people who are clearly comfortable about putting a lot of personal information online but they want to be in control of who they share this with."
He added: "Facebook has taken too much of the control away from users."
Mr Elliott said Facebook could still salvage something from Beacon.
"There's a pretty good chance there is something interesting here still for advertisers. This has caused a tremendous stir but users still have to opt out.
"You are not going to see many people opting out, either because they don't know or don't care about the issue."
He added: "Other social networks will have been paying very clear attention to this and learning some lessons."