A rule will be removed that currently means each separate viewing, or "hit", of a controversial webpage counts as a separate offence of libel.
A one-year time limit will also be introduced to online libel claims in order to stop people complaining about old articles.
It comes as public figures ranging from Rebecca Adlington, the Olympic champion swimmer, to Louise Mensch, the Conservative MP, and Stan Collymore, the former England footballer, have found themselves targeted by messages of hate online.
Kenneth Clarke, the Justice Secretary, said: "As the law stands, individuals can be the subject of scurrilous rumour and allegation on the web with little meaningful remedy against the person responsible.
"Website operators are in principle liable as publishers for everything that appears on their sites, even though the content is often determined by users. But most operators are not in a position to know whether the material posted is defamatory or not and very often - faced with a complaint - they will immediately remove material.
"Our proposed approach will mean that website operators have a defence against libel as long as they identify the authors of allegedly defamatory material when requested to do so by a complainant.
"The Government wants a libel regime for the internet that makes it possible for people to protect their reputations effectively but also ensures that information online can't be easily censored by casual threats of litigation against website operators. It will be very important to ensure that these measures do not inadvertently expose genuine whistleblowers, and we are committed to getting the detail right to minimise this risk."
The moves come just days after a woman won a landmark High Court ruling to discover the identities of Facebook "trolls" who tormented her.
Nicola Brookes had merely posted a supportive comment on the Facebook page of the former X Factor contestant Frankie Cocozza.
In response, some users of the social networking service sent her death threats and even set up a fake page in her name which was then used to send inappropriate messages to children.
Mrs Brookes failed to convince police to investigate so instead she won a legal order forcing Facebook to disclose the identities of the bullies, including their names, email addresses and their computers' Internet Protocol (IP) details, allowing them to be traced.
Her lawyers are now considering bringing private prosecutions against the four individuals believed to have led the abuse.
Under the proposals unveiled by ministers today, it would be far quicker and cheaper for victims of online abuse to track down their tormentors.
However the plan relies on the support of the Internet Service Providers, who are also critical to the success of two other major Government initiatives.
The Coalition wants the companies, who supply broadband to consumers, to store more details of internet usage and emails in case they need to be accessed for crime-fighting investigations.
And it is also considering forcing the internet providers to block all access to pornography websites unless customers specifically state otherwise.
The ISPs may fear it would be bad for business if customers believe they are spying on their online activities and readily giving away personal details to the authorities.