The agreement seeks to tackle an increase of 'cyberbullying' spurred by the growing use of social networking sites.
Cyberbullying takes place when someone repeatedly makes fun of another person online, repeatedly picks on somebody through emails, or uses online forums with the intention to harm, damage, humiliate or isolate another person that they do not like.
The agreement contains a number of measures that web firms have pledged to take, including "providing an easy to use 'report abuse button' [which will] allow users to report inappropriate contact from or conduct by another user" and "make sure that full online profile and contact lists of website users who are registered as under 18s are set to 'private' by default".
Information Society Commisioner Vivianne Reding lauded the agreement, saying that "it is an important step forward towards making our children's clicks on social networking sites safer in Europe".
"Social networking has enormous potential […] to help boost our economy and make our society more interactive – as long as children and teenagers have the trust and the right tools to remain safe when making new 'friends' and sharing personal details online," she stressed.
According to a 2008 Eurobarometer survey, 54% of European parents are worried that their child could be bullied online.
Google, one of the company that joined the Commission's initiative, noted "this social networking initiative is just the type of good, self-regulatory process that we are pleased to participate in with the European Commission. It follows upon our earlier initiative to protect children online, Teach Today".
As part of the Safer Internet Day event, the Council of Europe has also launched a Handbook on Internet Literacy, designed to help children make informed decisions when making posts and revealing personal information on the Internet.
To ensure that social network service providers live up to their commitments, Commissioner Reding said she will "closely monitor the implementation of the agreement and the Commission will come back to this matter in a year's time".
Last week, MEPs voted in favour criminalising "grooming", a phenomenon in which an adult befriends a child online with the intention of committing sexual abuse.
