Phone-hacking is the tip of the iceberg of a substantial black market in personal information, MPs have said.

Rogue private investigators are using tracking and recording devices easily available online to cash in on people's private lives and escape with paltry fines, said the Commons Home Affairs Select Committee.

A robust licensing and registration system for private investigators should be set up as soon as possible and the Government must act to sever the links between private investigators and the police, the MPs said.

"Personal data is easier than ever to access and a private profile of a person can be built from a desktop," their report into private investigators said.

"The ease of access has also opened the information market to new and unscrupulous suppliers, who may not be registered with the Information Commissioner and are unlikely to understand the rules under which they ought to operate. Phone-hacking appears to be the tip of the iceberg of a substantial black market in personal information."

Keith Vaz, the committee's chairman, added: "We have found that rogue private investigators are the brokers in a black market in information. They illegally snoop on our data, cash in on our private lives and only get away with a paltry fine. The public must be assured that those acting as 'private investigators' are subject to stringent checks, act under a code of conduct, and will face tough penalties if they step out of line."

The committee also called for the Government to sever the links between police forces and private investigators, with both parties having to formally record any contact. There should be a one-year cooling-off period between retirement from the police force and working in private investigation, said the committee.

Mr Vaz added: "It is time this industry was regulated, so that the honest majority can get on with their work. We expect the Government to act urgently."

The committee called for the Independent Police Complaints Commission to take direct control of cases alleging police corruption. Home Secretary Theresa May should also strengthen the penalties available for offences relating to the unlawful obtaining, disclosure and selling of personal data, the MPs said.

A Home Office spokesman said: "We will carefully consider the committee's report. Given the relevance of this issue to the matters being considered by the Leveson Inquiry, we will await its findings to ensure they can be taken into account in the development of a suitably effective regulatory regime. Private investigators remain subject to the law on intercepting communications like everyone else."