Small businesses in the UK could still do more to take advantage of opportunities offered by the internet, a new report suggests.

The Office of Fair Trading (OFT) found that rapid growth in the use of internet shopping has been beneficial for both consumers and small businesses, but concluded that more could still be done to improve business performance.

According to the report, many small internet traders are still unaware of their obligations under the Distance Selling Regulations (DSRs) - which are designed to protect online shoppers.

Additionally, small firms still need to act to address public concern about privacy and security when shopping online.

"The internet has added a welcome new dimension to competition in the economy, as well as providing convenience for shoppers and new opportunities to compare prices and find new products," explained John Fingleton, the OFT's chief executive.

"However, if online shopping is to continue to flourish, the awareness and the protection of consumers' rights need to improve.

"The OFT is committed to working with businesses, consumer groups and other bodies to make sure that consumers can shop with confidence online."

A recent survey from the US found that 80 per cent of people said they would choose to use sites with "a safe and secure online payment option" when shopping online.