One in three internet users between the ages of 12 and 15 say they saw "hate speech" online in the past year, according to Ofcom's latest survey of children's media habits.
It is the first time the UK regulator has posed a question about the topic in its annual study.
The NSPCC charity said the finding was "very worrying", adding such posts should not be tolerated.
Natasha MacBryde was a beautiful, clever girl hoping to be a vet or paediatrician, who seemed perfectly happy at school until a few months after she turned 15, when she suddenly wanted to dye her hair brown.
Her mother Jane discovered, over the next few weeks, that Tasha (as the family called her) had become the target of nasty messages from fellow pupils on Formspring, a website (which has since closed) where the senders could remain anonymous.
She was further upset at being rejected by a boy she liked. On the evening before Valentine's Day, she looked at Formspring one last time - with its latest, poisonous message - then slipped out of the house and walked to a nearby railway track. She was hit by a train.
Internet trolls who create derogatory hashtags or doctored images to humiliate others could face prosecution in England and Wales.
Inciting people to harass others online, known as virtual mobbing, could also result in court action, under new Crown Prosecution Service guidance.
The director of public prosecutions said it means the CPS would prosecute just as if offences occurred offline.
Scotland Yard has created a new unit to police Facebook and Twitter by investigating offensive comments.
A team of volunteers will search out material they deem inappropriate on social networks and report it to the unit. The allegations will then be investigated and the culprits prosecuted, if caught.
“Children feel under pressure to have this perfect life that it looks like everyone else is having according to Instagram and that’s really hard to deal with”
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