Commissioned by the Cabinet Office, the report looks at the novel ways the web helps people use information and how government can get involved.
The report said that some public data, such as post codes, was already widely used but much more could be done to open up access to official information.
It said public data should be published in open formats to encourage use.
Mix and mash
The review, called The Power of Information, aimed to find out more about Web 2.0 tools and communities to see how the government can get involved to help Britons make the most of this "new pattern of information creation and use".
Written by Tom Steinberg, director of MySociety, and Ed Mayo, chief executive of the National Consumer Council, the review looked at sites such as MoneySavingExpert and Netmums that are rallying points for communities and let people share advice and information.
It also scrutinised sites that gave users tools that let them mix up and "mash" data to put it to uses that were never originally considered.
The review was intended to "explore the role of government in helping to maximise the benefits for citizens from this new pattern of information creation and use."
It noted the many cases in which public sector information already generated huge amounts of business in the UK.
For instance, Ordnance Survey estimates that the data it provides is behind £100bn per year of economic activity.
The report encouraged the government to do more to ensure a good fit between web communities and official information to "grasp the opportunities that are emerging in terms of the creation, consumption and re-use of information".
The benefits of making it easier to use and share official information were not just financial, said the report.
For example, in Los Angeles sharing reports about the food safety records of restaurants has led to a significant drop in food poisoning cases.
More work
But the report took the government to task for not putting in place policies that make the most of web opportunities.
The authors recommended that the government work more closely with existing sites and communities that share official aims; do more to help innovators use public data and work to ensure people know what to do with public data and how to get at it.
Among 15 specific recommendations the report said the government should not set up its own sites if existing web communities do a good job of getting information to people.
It also said it should speed up efforts to put data in open formats and publish under terms that let people freely use it.
In a statement the Cabinet Office said the review was carried out to help government get up to speed with changes in the world of communication and information technology.
"Government cannot afford to overlook this phenomenon of citizens changing their lives through their use of information, especially what they find on the internet," said Cabinet Office Minister Hilary Armstrong.
Ms Armstrong said the government had to support those that want to use information to build communities or make better decisions in day-to-day life.