Technological developments have sparked a wave of new types of crime and a 30% hike in recorded online fraud is just the "tip of the iceberg", Yvette Cooper will warn.
But fears about abuse of information in the wake of leaks by former US security contractor Edward Snowden, which revealed widespread spying by government listening post GCHQ, means new safeguards are needed to protect privacy.
Controversial plans by Home Secretary Theresa May to enable the police and security services to track emails and other online communications under a "snooper's charter" were blocked by the Liberal Democrats.
Ms Cooper will warn the Government it must not "bury its head in the sand" as she calls for reforms to keep up with the ever-changing cyber world.
Much stricter controls over access to private data must be introduced to give the public confidence amid fears about the way information can currently be accessed and used, she will say.
In a speech in central London to the Demos think-tank, Ms Cooper will call for a new national strategy for tackling online fraud, tougher action to tackle online child pornography and an overhaul of parliament's Intelligence and Security Committee.