The European Commission wants to introduce harsher penalties for cyber criminals, potentially increasing jail sentences to five years.

At a meeting of industry body the Messaging Anti Abuse Working Group in Holland, Radomir Jansky, a senior cyber crime official in the Commission, said new legislation was vital.

"We need new legislation to fight cyber attacks. Large-scale attacks are on the rise but penalties…are not severe enough to dissuade criminals," he said, according to The Financial Times.

"The cost for businesses, law enforcement and state authorities is on the rise, and we need to recognise that."

The Commission also wants to create an EU-wide reporting system so nations can raise the alarm over attacks, and data on attacks can be collected and aggregated.

The Commission has a budget of more than £50m to fund projects aimed at preventing e-crime.

Cyber attacks on Kyrgyzstan, Lithuania and Estonia over the past two years have bought the issue to public attention.

And security services are still concerned that China is monitoring networks inside the UK.

US president Barack Obama has recently voiced concerns over cyber crime and is to appoint a "cyber-tsar" to try to tackle the problem.