Those illegally sharing files will face the loss of their net access thanks to a newly-created anti-piracy body granted the wide-ranging powers.
The anti-piracy body comes out of a deal agreed by France's music and movie makers and its net firms.
The group who brokered the deal said the measures were intended to curb casual piracy rather than tackle large scale pirate groups.
French President Nicolas Sarkozy said the deal was a "decisive moment for the future of a civilised internet".
Net firms will monitor what their customers are doing and pass on information about persistent pirates to the new independent body. Those identified will get a warning and then be threatened with either being cut off or suspended if they do not stop illegal file-sharing.
The agreement between net firms, record companies, film-makers and government was drawn up by a special committee created to look at the problem of the net and cultural protection.
Denis Olivennes, head of the French chain store FNAC, who chaired the committee said current penalties for piracy - large fines and years in jail - were "totally disproportionate" for those young people who do file-share illegally.
In return for agreeing to monitor net use, film-makers agreed to speed up the transfer of movies to DVD and music firms pledged to support DRM-free tracks on music stores.
The deal was hailed by the International Federation of the Phonographic Industry (IFPI), which represents the global interests of the music business.
"This is the single most important initiative to help win the war on online piracy that we have seen so far," it said in a statement.
French consumer group UFC Que Choisir was more cautious.
It said the agreement was "very tough, potentially destructive of freedom, anti-economic and against digital history".
Some of the delegaes said more study is needed before excessive use of video and online games -- a problem that affects about 10 percent of players -- could be considered a mental illness.
"There is nothing here to suggest that this is a complex physiological disease state akin to alcoholism or other substance abuse disorders, and it doesn't get to have the word addiction attached to it," said Dr. Stuart Gitlow of the American Society of Addiction Medicine and Mt. Sinai School of Medicine in New York.
While occasional use of video games is harmless and may even help with some disorders like autism, doctors said in extreme cases it can interfere with day-to-day necessities like working, showering or even eating, they added.
"Working with this problem is no different than working with alcoholic patients. The same denial, the same rationalization, the same inability to give it up," said Dr. Thomas Allen of the Osler Medical Center in Towson, Maryland.
Researchers in Britain found that 12 percent of gamers are "addicted" according to World Health Organization criteria, and researchers in the United States found that as many as 10 to 15 percent of gamers are affected by "overuse," the report said.
"However, as with findings on long-term aggression, there is currently insufficient research to conclude that video game overuse is an addiction," the report concluded.
After a three-day meeting in southern German city of Munich, interior and justice ministers of the G8 nations said in a statement that more monitoring of the internet was required as terrorist groups were making growing use of modern communications technologies, German news agency dpa reported.
The G8 should also pay more attention to "homegrown terrorism" in their own societies, especially some vulnerable areas, including energy infrastructure, said the statement.
Meanwhile, the ministers called for fresh action to stop Afghans growing opium poppies, which are believed to have been financing terrorist activities.
German Interior Minister Wolfgang Schaeuble, whose country holds the rotating G8 presidency, admitted that years of fight against poppy farming had been "anything but satisfactory."
Afghanistan remains by far the world's biggest producer of opium.
The G8 groups the United States, Germany, Britain, Italy, France, Japan, Canada and Russia
The ministers were meeting in preparation for the upcoming G8 summit to be held early June in the northern German beach resort of Heiligendamm.