At a news conference announcing the new report, FTC Chairman Jon Leibowitz praised the efforts that industry stakeholders have made in crafting new privacy tools and policies, and reiterated his hope that a self-regulatory approach can achieve meaningful consumer safeguards.

"We are demanding more and better protections for consumers and consumer privacy not because industry is ignoring the issue. In fact, the best companies already follow the privacy principles laid out in our report," Leibowitz said. "And in the last year, online advertisers, major browser companies and the World Wide Web Consortium, an Internet standards-setting group, have all made great strides toward putting in place the foundation of a do-not-track system."

In that spirit, Leibowitz said that the FTC will not initiate any independent rulemaking proceedings concerning privacy, save for the update to the Children's Online Privacy Protection Act that is already underway.

But he also warned Web companies and their trade associations that the window for self-regulation may be closing. Leibowitz said that he is hopeful that do-not-track can be implemented without a government mandate, but if the industry stakeholders are unable to achieve that goal by the end of the year, they could face the prospect of broad, bipartisan support for tough privacy legislation in the next session of Congress.

"I'm very hopeful that do not track can be done without legislation," Leibowitz said. "But if it can't be, I suspect it will be done with legislation. And I think in many ways companies would be -- they recognize they'd be wise to avoid that particularly when they're supportive of it."