Governments must strike a balance between policing the internet to protect copyright and upholding freedom of expression, EU justice commissioner Viviane Reding said.
Reding was reacting to a US crackdown on hundreds of websites accused of offering pirated music or movies or counterfeit goods, as well as calls for new legislation to guard intellectual property.
"The protection of creators must never be used as pretext to intervene in the freedom of the internet," Reding told an international internet conference in the southern German city of Munich, noting the "heated debate" surrounding the issue.
US authorities have seized more than 350 website domain names since launching an anti-online piracy campaign dubbed "Operation In Our Sites" more than 18 months ago, including a spectacular global swoop on file-sharing site Megaupload.com.
But US congressional leaders put strict anti-online piracy legislation on hold following a wave of protests led by Google and Wikipedia denouncing the bills as a threat to internet freedom.
Reding warned against an overzealous approach that could have a chilling effect on the industry.
"You'll never have from Europe a blocking of the internet - that's not the European option," she said.
"Freedom of information and copyright must not be enemies, they are partners... European policy aims at equilibrating the respect of both rights."
She outlined proposals to protect the online data of European citizens to be presented in the coming days.
The current legal "patchwork will be replaced by one law which will apply to all member states, to all companies which are offering their goods and services to consumers, even if their servers are based outside the EU", she said.
The legislation would restrict internet giants such as Facebook and Google from collecting the personal data of European web users and getting around European privacy laws by storing it abroad.
Reding said she aimed to have companies obtain the consent of consumers for the use of their data in "clear" terms, explain how it is stored and notify users if it is stolen or lost.
She said web users should also have the "right to be forgotten", or the right to withdraw their consent and have their data erased except in cases where there is a legitimate interest in maintaining information in a database.