The peers warn that surveillance has become "pervasive" in the UK
The government does not appreciate the threat posed to privacy by surveillance, peers have warned.
In a report, the Lords Constitution Committee says the Information Commissioner does not have enough power to prevent abuse by the private sector.
Its chairman Lord Goodlad said ministers did not recognise the "fundamental importance of privacy".
In response, the Ministry of Justice said it did "not regard the UK as a surveillance society".
In February, the committee published a report entitled Surveillance: Citizens and the State, which will be debated in the Lords on Friday.
It warned that surveillance and collection of personal data were "pervasive" and a threat to British democracy.
In a follow-up report, peers warn that the government has not given enough details of how the Information Commissioner's Office will monitor the effect of surveillance and data collection on privacy.
It also says ministers' promise of privacy impact assessments to preserve the public's rights should be "treated with caution" as they are not a panacea and are untried in the UK.
The latest report also criticises the government's decision not to allow the Information Commissioner's Office to inspect private sector organisations without their consent.
However, it welcomes the decision by ministers to hold a review into the effectiveness of CCTV.
Lord Goodlad, a Conservative peer, said: "We are disappointed the government has failed to recognise the fundamental importance of privacy in the relationship between individuals and the state.
"While we welcome some elements of their response we are concerned that they seem to think privacy impact assessments will be enough to reassure citizens that the information kept about them is appropriate and proportionate."
In its latest report, the committee called for compensation for people subject to illegal surveillance, saying people were often unaware of the scale of personal information held and exchanged by public bodies.
Among areas of most concern to the committee were the growth of CCTV cameras, of which there are now an estimated four million in the UK.
The committee recommended that the use of cameras should be regulated on a statutory basis, with a legally binding code of practice governing their use.
There was evidence of abuse of surveillance powers by some councils, with cameras wrongly being "used to spy on the public over issues such as littering".
The UK's DNA database was the "largest in the world", the report concluded, with more than 7% of the population having their samples stored, compared with 0.5% in the US.
The Ministry of Justice welcomed the committee's contribution to the debate but said it was working with the Information Commissioner's Office to prevent abuses.
"The government remains of the view that the balance between the protection of the public and individuals' privacy is of the utmost importance in this debate," a spokesman said.
"We consistently ensure that any actions we take as a government that might impact on privacy are both necessary and proportionate."