The Policy Exchange study titled 'The NewNetwar' found that Britain also ranks fifth in terms of world audience for extremist content after Turkey, the US, Saudi Arabia and Iraq, respectively.
After an in-depth analysis of clicks into such material, Britain emerged as the fifth most frequent location from which extremist content was being accessed online. The country also registered the largest number of clicks of such information in Europe.
"If the internet companies won't do what their customers want and take more responsibility for removing this content, then government must take action through additional regulation and legislation," he said.
Contrary to previous claims, the report by the London- based centre-right think tank revealed that Islamic State (IS) online output is not falling, but has remained consistent over the past three years.
Extremists are now increasingly relying on "swarmcast" technology - an interconnected network that constantly reconfigures itself and is highly resilient to disruption.
"IS have adapted to shifts in technology and now use Telegram as their core communication platform for talking to sympathisers - even as platforms like Twitter, YouTube and Facebook remain vital for missionary activity," it warns.
The report comes days after the UK Home Office said that 379 arrests have been made for terror-related offences in the country, a record 68 per cent increase in the last 12 months up to June this year.
He said: "The fight against IS, Al Qaeda, and the other elements of the global jihadist movement has become the defining struggle of the early 21st century.
"That struggle has increasingly been contested not just on the ground, but in a new domain of warfare, cyberspace...It is clear that our counter-extremism efforts and other initiatives to combat extremism on line have, until now, been inadequate".
The report suggests new laws to criminalise the "aggravated possession and/or persistent consumption" of extremist ideology - but not to criminalise someone who "stumbles across" jihadist content.
A survey of 2,001 adults in the UK by the Policy Exchange found that 74 per cent of people supported new laws to criminalise the "persistent consumption" of extremist material online.
The think tank has called for the UK government's proposed Commission for Countering Extremism to be empowered to oversee the removal of extremist content, and for the possible creation for an independent online regulator that could financially penalise companies that fail to remove extremist content.
"We are making significant progress through machine learning technology, partnerships with experts and collaboration with other companies through the Global Internet Forum - and we know there is more to be done.
Disclaimer: No Business Standard Journalist was involved in creation of this content
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