A study by the accountants PwC and the Internet Advertising Bureau (IAB) found that online advertising spending increased three times as rapidly as in 2009.
The internet now accounts for a quarter of all advertising spending in the UK. The value grew by 12.8% in 2010, breaking through the £4bn barrier.
While the rest of the advertising market is recovering following a dip during the recession, online advertising still outpaced it.
Chief executive of the IAB, Guy Phillipson, said "Major brands restored their advertising budgets in 2010 and online was a big winner".
Display advertising on social networks grew by nearly 200% making it the biggest growth area.
In the past year Facebook has made advances in persuading advertisers to see social networks as a good place to promote their services.
UK internet users spend approximately a quarter of their time online on social networks, and advertisers are keen to tap into this.
The online video advertising sector also saw massive growth with £54 million spent on adverts that appeared before, during or after video clips in 2010. This is nearly double the figure from 2009.
Mobile advertising is a winner to, with finance, consumer and telecoms brands striving to reach audience on the go.
It is search advertising, still dominated by Google, that remains the biggest earner though the rate of growth was just 8%.
Ian Barber of the Advertising Association says there is one clear attraction which is driving online spending: "It's targeted; it makes it easier for brands to work out who they're advertising to."
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