The home secretary Jack Straw will announce plans to create a £20m National High-Tech Crime Unit Monday morning according to reports Sunday.
The special unit, which will include members of the police, customs and excise, the National Crime Squad and the National Criminal Intelligence Service (NCIS), will start work next year.
Sources say the unit will be responsible for catching paedophiles using entrapment procedures. Entrapment techniques proposed to catch paedophiles using chatrooms were thrown out of the House of Lords last week. The unit will also be used to combat Internet fraud and hacking attempts aimed at British business.
Last week, children's charities severely criticised Yahoo! for not doing enough to protect children using its chatroom facilities.
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