The Internet is becoming a playground for criminals and has turned into a lawless "wild west'', according to a report out of Britain's House of Lords.

The report says there the Internet has given rise to a huge underground economy.

"With money available on this scale, it is hardly surprising that those responsible for e-crime, commonly known in the IT world as the "bad guys", include major organised crime groups, typically, though not exclusively, based in eastern Europe. They are well resourced, and employ specialists to perform particular tasks, such as hacking vulnerable websites, cashing cheques, receiving goods fraudulently purchased online, and so on. In summary, the Internet now supports a mature criminal economy," the report said.

It says banks are losing millions from online banking fraud and identity theft is becoming more and more of problem.

The report comes up with a number of radical recommendations.

One of the most interesting is the proposal to stop companies dumping risks onto consumers through licensing agreements that help them avoid paying the costs of insecurity. It calls for the introduction of a European-wide principle of vendor liability which in effect puts the heat on software and hardware manufacturers.