The U.S. Data Privacy Act, passed in 1974, is a broad privacy rule originally meant to cover both the private sector and federal agencies. But it was tweaked at the last moment to apply only to government agencies, Reidenberg said.

The administration's support is being driven by heightened concerns about rampant and uncontrolled online data collection practices now prevalent, he said. The fears "have finally coalesced into a significant enough concern among the public that the administration is responding. I think there is recognition that data has been such a fuel for economic activity but in a one-side way."

All too often in recent years consumers have been unaware of how their information was being collected and used, he said. Some high-profile examples include and .

"If Congress acts, I believe it will be a major advance for Americans' privacy," he said.

Erica Newland, a policy analyst at the Center for Democracy and Technology, today said that the White House's support for a new privacy bill will help its passage in Congress.