Online advertising expenditure jumped 41.2% to £2.01bn during the year, the report by the Internet Advertising Bureau and PricewaterhouseCoopers said.

In contrast, spending on national newspaper ads grew just 0.2% to £1.9bn, taking a 10.7% share of the market.

But despite online ads taking an 11.4% market shares, internet ad spending was just over half that for TV adverts.

TV advertising itself experienced a 4.7% fall in spending to £3.9bn.

"With almost all expenditure on traditional media in decline, the upward momentum of the internet reflects a new era ... which is driven by high-speed broadband take-up and user-generated content," the report said.

Popular medium

The report added that online advertising actually grabbed a record market share of 12.4% in the second half of 2006, as expenditure topped £1.098bn.

As a result of such heavy spending on online adverts, the UK's online ad market share is almost double the global average of 5.8%, the report added.

Recruitment spent the most on web advertising - increasing expenditure by 2.7% - followed by finance and technology.

"The internet is a hugely popular mass medium now, and advertisers are continuing to switch more of their budgets online to build their brands and interact with their customers," said IAB chief executive Guy Phillipson.

"2006 was a tough 12 months for the advertising market as a whole, but once again the internet bucked the trend, recording a 41% increase in ad revenues.

"With consumers now enjoying even faster broadband and installing wireless routers in their homes, the growth of online advertising in the UK is set to continue unabated," he added.

Source: BBC News