A national cyber security centre to combat the growing threat of criminal gangs and foreign states hacking into Whitehall and big business is to be announced this month by the prime minister.
The centre will be the main theme of a revised national security strategy paper from No 10 which will place much greater emphasis on tackling the threat.
The organisation will be similar to an agency being created by Barack Obama who is appointing a cyber tsar to fight what the US president referred to last month as " weapons of mass disruption".
Britain has been holding talks with the US and Canada to co-ordinate operations against cyber attacks by foreign powers and terrorists.
The latest initiative is being developed in parallel to the Americans and follows a warning from Jonathan Evans, head of MI5, of the need to tackle the threat.
He warned 300 chief executives and security chiefs in banks and accounting and legal firms in 2007 that they are under attack from "Chinese state organisations" and has followed this with a review of cyber security across Whitehall.
Many hackers are believed to be groups in China, Russia and North Korea that are suspected of being state-sponsored. They are said to have increased recently though no details have been provided by government departments.
The government's decision amounts to a U-turn in its policy to tackle cyber crime which until now has been run by a shadowy group attached to the security services and deliberately kept low-profile.
Now it will be run by a high-profile body with the Cabinet Office co-ordinating operations across the whole of Whitehall.
Only 18 months ago government departments were refusing to answer questions from peers or MPs on whether there had been any cyber attacks on Whitehall.
Labour peer Lord Harris of Haringey, who is a member of the Metropolitan Police Authority, and has warned Britain faces an " electronic 9/11", has tabled questions asking for details of cyber attacks to every ministry in Whitehall.
He was banned from receiving any information.
A co-ordinated statement issued by every ministry, from the Home Office to the Ministry of Defence, said: "It is not in the interests of the UK's national security for departments to confirm whether they hold information about attacks against their IT systems.
"This would enable individuals to deduce how successful the UK is in detecting these attacks and so assist such persons in testing the effectiveness of the UK's IT defences."
Harris saidtoday :" I would welcome a decision to set up a new agency. There is a real and growing danger of threats and espionage from delinquent teenagers, organised crime, state sponsored attackers and terrorists."
British interest in taking high-level action against cyber crime follow revelations exposing the holes in US online security and fears from the Canadians that their systems could be compromised.
Like the US, where competing agencies tackle cyber crime, Britain has different organisations fighting the threat, from the Serious Organised Crime Agency to the Metropolitan police's ecrime unit.
The Critical National Infrastructure - the name for key computer systems protecting communications, water and energy networks, emergency services and public safety - relies on voluntary compliance to protect itself from cyber attacks and is mainly run by big corporations.
Chinese hackers are alleged to have successfully infiltrated parts of America's electricity grid.
It has also been revealed that hackers stole valuable information on the Joint Strike Fighter programme, potentially putting the $300bn ( £186bn) scheme in jeopardy.
Western officials regularly blame Russia and China, which they claim employ teams of hackers who are responsible for many state-sponsored attacks.
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