Current UK copyright laws unfairly criminalise consumers and must be changed according to a report from the Institute for Public Policy Research (IPPR).
The organisation said the current laws are outdated because they don't take into account the way consumers use new technology to listen to music, watch movies or read books.
The think-tank has submited the report, Public Innovation: Intellectual property in a digital age, to the Gowers Review which is looking at the issue of Intellectual Property rights.
The IPPR said the Government should update the 300-year-old legislation to give consumers a "private right to copy".
According to research from the National Consumer Council, more than half of British consumers already infringe copyright law by copying CDs onto their computers, iPods or other mp3 players.
The report said this could easily be done without any significant harm to the copyright holders and would protect people from downloading music, movies and ebooks to digital devices by decriminalising copying for personal use.
Dr Ian Kearns, IPPR deputy director, said: "Millions of Britons copy CDs onto their home computers breaking copyright laws every day. British copyright law is out of date with consumer practices and technological progress.
"Giving people a legal ‘private right to copy’ would allow them to copy their own CDs and DVDs onto their home computers, laptops or phones without breaking the law.
"When it comes to protecting the interests of copyright holders, the emphasis the music industry has put on tackling illegal distribution and not prosecuting for personal copying, is right.
"But it is not the music industry’s job to decide what rights consumers have. That is the job of Government."
The IPPR also said the Government should reject calls from the UK music industry to extend copyright term for sound recordings beyond the current 50 years. The report argues that there is no evidence to suggest that current protections provided in law are insufficient.
As well as looking at the consumer issue, the IPPR said the Government should act to ensure that Digital Rights Management (DRM) technology does not continue to affect the preservation of electronic content by libraries.
The British Library should be given a DRM-free copy of any new digital work and libraries should be able to take more than one copy of digital work. It also recommends that circumvention of DRM technology should stop being illegal once copyright has expired.

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