Broadband firms could face formal action if they fail to give consumers accurate information about the speed they will get when they sign up.
The warning comes from Ofcom as it moves to ensure that net firms do not oversell broadband in advertising.
Customers should get specific data about the speed on their line or be able to back out of the deal.
The regulator said new guidelines on the selling of broadband should come into force early in 2008.
Clear information
The warning came in a letter sent by Ofcom boss Ed Richards to the Ofcom Consumer Panel in response to its work with broadband suppliers on the advertising and selling of high-speed services.
In October the panel talked to chief executives at the UK's top six net service firms to find out why consumers often do not get the speeds broadband firms advertise.
Net firms have been criticised for advertising their services using the phrase "up to" that can give consumers a false sense of the speed they will get when they sign up.
The Ofcom Consumer Panel said speeds advertised as "up to" a certain level end up being much slower in reality.
The panel called on Ofcom to set up and administer a mandatory code of practice for net firms.
Panel chairman Colette Bowe said: "This code would establish agreed processes to give the customer the best information during and after the sales process, and to give them flexibility to move freely to different packages that reflect the actual speeds with which their ISPs are able to provide them."
The code would let customers know as they sign up about the maximum theoretical speed they can get on their line; provide information about what affects line speed and call customers two weeks after installation to let them know what speed they are getting.
At that time, if speeds were "significantly" lower than those someone signed up for, customers should be able to swap to a different package free of charge or back out of the deal.
Customers should get more data about what can slow line speed
The panel also said it would ask the Advertising Standards Authority to ensure that the advertising for net services feature more prominently information about what can slow the passage of data.
The consumer panel talked to net firms about the problem with line speeds following widespread reports that consumers were disappointed with the broadband speeds they were getting.
In late September a study by UK magazine Computeractive found that 62% of those who used its speed testing software were browsing the net at less than half of the top speed advertised by their supplier.
It also said Ofcom should put more information on its website to give consumers as much information as possible before they sign up or switch suppliers.
In his response Ofcom boss Ed Richards backed the consumer panel work and said it was talking to the broadband industry about how best to implement the recommendations.
The result of these discussions should be made public early in 2008, he said.
"We are keen that any measures are implemented in the shortest time frame possible," said Mr Richards. "At this stage, we have not ruled out the possibility of using formal powers if we consider it would be more effective in delivering our objectives."
A spokeswoman for Ofcom said that currently the regulator had no powers to enforce the new arrangements on the selling of broadband but would seek them by beefing up the guidelines net firms must abide by.
"This is a considerable consumer issue we are concerned by," said the spokeswoman. "We think consumers should get what they pay for. It's an important decision for them."
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