The threat of a cyber assault on Britain is considered so serious it is marked as a higher threat than a nuclear attack, according to an influential group of MPs.
Despite being the preferred target of online criminals in 25 countries, the UK is still "complacent" towards cybercrime as victims are "hidden in cyberspace", the Home Affairs Select Committee said.
The group of MPs said funding and resources for tackling online crime, which includes identity theft, industrial espionage, credit-card fraud and child exploitation, has not been sufficiently allocated.
Cybercriminals in 25 countries are said to be targeting the UK Tougher sentences for online criminals and improved training for police officers are recommended by the Committee to deal with the growing threat.
Committee chair Keith Vaz said: "We are not winning the war on online criminal activity. We are being too complacent about these e-wars because the victims are hidden in cyberspace.
"The threat of a cyber attack to the UK is so serious it is marked as a higher threat than a nuclear attack.
Christopher Whitehead, the hacker at the heart of an attack on Paypal "You can steal more on the Internet than you can by robbing a bank.
"If we don't have a 21st century response to this 21st century crime, we will be letting those involved in these gangs off the hook."
Online crime - committed by lone hackers, activist groups and nation states sponsoring industrial espionage - has been estimated by online security firm Norton to globally cost around £250bn ($388bn) in financial losses.
The Committee heard that the National Fraud Intelligence Bureau had discovered about 25 countries predominantly targeting the UK and said it was "deeply concerned" that EU partner countries are not doing enough to prevent the attacks.
The Committee added it was "surprised" hackers from the group Anonymous, who cost Paypal more than £3.5m, were not given stiffer sentences.
Christopher Weatherhead, a 22-year-old university student who was described as a key operator in the group, was sentenced to 18 months in prison for his role in the attack.
Hidden in cyberspace: The UK is too complacent towards e-crime, say MPs Commissioner Adrian Leppard, of City of London Police, the most senior policeman in the country on online fraud, warned the Committee that a quarter of the 800 specialist internet crime officers could be axed as spending is cut.
The Committee was also alarmed that the Child Exploitation and Online Protection centre is having its budget cut by 10% over four years and its chief executive Peter Davies is leaving.
Last week, David Cameron threatened to impose tough new laws on internet firms if they fail to blacklist key search terms for illegal images by October as part of a wider crackdown on online pornography.
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