The UK faces a "democratic crisis" due to the spread of "pernicious views" and the manipulation of personal data, a parliamentary committee is set to warn.
The Digital, Culture, Media and Sport (DCMS) Committee has been investigating disinformation and fake news following the Cambridge Analytica data scandal.
In its first report it will suggest social media companies should face tighter regulation.
It also proposes measures to combat election interference.
The report warns that the "relentless targeting of hyper-partisan views, which play to the fears and prejudices of people, in order to influence their voting plans" is a threat to democracy.
The committee's report was due to be officially published on Sunday.
But a copy was leaked on Friday by Dominic Cummings, the director of the official Brexit campaign group Vote Leave, who published it on his own blog.
The committee says Mr Cummings was asked to take part in their inquiry to respond to allegations made against the Vote Leave campaign, but he refused. Mr Cummings called the report "fake news".
The committee suggests:
1. Social media sites should be held responsible for 'harmful' content on their services
Companies such as Facebook and YouTube have repeatedly said they are just a "platform", rather than a "publisher". They have argued that they are not responsible for the content people post on their services.
"Social media companies cannot hide behind the claim of being merely a 'platform', claiming that they are tech companies and have no role themselves in regulating the content of their sites," the committee said.
"They continually change what is and is not seen on their sites, based on algorithms and human intervention.
"They reward what is most engaging, because engagement is part of their business model and their growth strategy.
They have profited greatly by using this model."
The committee suggested a "new category of tech company" should be created, which was "not necessarily a platform or a publisher" but something in between.
This should establish "clear legal liability for the tech companies to act against harmful and illegal content on their platforms," the report said.
2. The rules on political campaigns should be made fit for the digital age.
The committee said electoral law needed to be "updated to reflect changes in campaigning techniques".
creating a public register for political advertising so that anybody can see what messages are being distributed.
online political advertisements should have a digital imprint stating who was responsible, as is required with printed leaflets and advertisements.
social media sites should be held responsible for interference in elections by malicious actors.
electoral fraud fines should be increased from a maximum of £20,000 to a percentage of organisations' annual turnover.
3. Technology companies should be taxed to fund education and regulation.
Increased regulation of social media sites would result in more work for organisations such as the Electoral Commission and Information Commissioner's Office (ICO).
The committee suggested a levy on tech companies should fund the expanded responsibilities of the regulators.
The money should also be spent on educational programmes and a public information campaign, to help people identify disinformation and fake news.
4. Social networks should be audited.
The committee warned that fake accounts on sites such as Facebook and Twitter "not only damage the user experience, but potentially defraud advertisers".
It suggested an independent authority such as the Competition and Markets Authority should audit the social networks.
It also said security mechanisms and algorithms used by social networks should be available for audit by a government regulator, to ensure they are "operating responsibly".