EU states should also try to reach deals with third countries on methods to fight cybercrime as well as on shutting down illegal websites, said the report from the EU's executive Commission due to be approved today.
''There is an urgent need to take action, at national as well as European level, against all forms of cybercrime, which are increasingly significant threats to critical infrastructures, society, business and citizens,'' the draft seen by Reuters says.
It said the EU executive plans a conference of enforcement experts and the private sector this year to consider ways to boost cooperation against cybercrime, which ranges from traditional crimes such as fraud via the Internet, posting racist or pornographic images, to hacking.
Proposals in the draft report include initiating public-private agreements aimed at the EU-wide blocking of sites containing illegal content like child sexual abuse.
The Commission also wants police to make use of cross-border instruments already at their disposal, including a convention on cybercrime, which it argues is not well used.
Many EU states remain wary of pan-EU crime laws feeling they impinge on national soverignty.
The report said the number of cybercrimes was growing and criminal activities were becoming increasingly sophisticated and internationalised. ''Clear indications point to a growing involvement of organised crime groups in cybercrime,'' it said.
The new report comes with new EU member state Estonia reeling from three weeks of cyber attacks on government and private Internet sites.
These appear to have stemmed initially from Russia, with which Estonia has been in dispute over the latter's plans to move a Soviet-era statue and peaked on May 8 and 9 -- during events to mark the anniversary of victory over the Nazis.
The Kremlin, whose relations with the European Union have become increasingly moody, has denied waging a ''cyber-war'' against Estonia's infrastructure.
The European Commission said it planned to propose little to no legislation for its proposals, limiting itself to launching a public consultation this year on the opportunity of having an EU-wide law on identity theft on the Internet.
Cybercrime can be traditional crime such as fraud, committed via internet, it can be the posting of illegal content - racism, child pornography -- on Internet, it can also relate to specifically electronic crimes such as hacking.
Reuters SM VV0916