The Government has told the advertising industry to bring online ads fully under the remit of its voluntary code or face the threat of legislation.
Ministers stepped up the pressure on the industry to act as they expressed concern about the number of internet ads aimed at children.
"It cannot be right that 90 per cent of the complaints to the Advertising Standards Authority about online ads were outside its remit," one government source said. "The industry has got to put its own house in order."
Industry leaders think they can head off the threat and insist plans to meet government guidelines are in the pipeline. The Advertising Association's Digital Media Forum will report this autumn and the industry is revising its own code.
The issue is on the political agenda after a government-commissioned report by the psychologist Dr Tanya Byron on the impact of the internet on children was released last week.
She recommended the "future-proofing" of the regulatory system to include digital to prevent "harmful and offensive advertising to children".
Lord Smith, the ASA chairman, said: "The ASA shares this concern about protecting children and has already challenged the industry to address the regulatory gap that currently exists around advertising that appears online.
"Encouragingly, the industry is engaging with this challenge."
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