While there were already laws which could be used against cyber bullies, "a distressed victim or a young person may not wish to give evidence in court" and civil action was often beyond their financial reach.
One alternative was a new tribunal operating at a lower level than the court system but which could administer "speedy, efficient and relatively cheap justice" to victims.
The tribunal would hear victims' complaints and potentially make orders for financial compensation, an apology or a correction.
It could also issue a "take down" order against the perpetrator or their internet service provider, removing their access to the internet.
Another proposal was for an independent commissioner to whom victims could turn for assistance.
Netsafe executive director Martin Cocker welcomed the proposals.
"It gets to the heart of the problem with all of this which is that it's very easy to offend against somebody in these ways but very difficult for people to take action to remedy that.
"If this gave them the option to take some action that would be brilliant, and hopefully it would deter people from making those kind of offensive statements in the first place."
Mr Cocker also welcomed the suggested law changes around incitement to suicide and the publishing of intimate images without consent.
"We obviously discourage people from taking those kind of photos in the first place because of the trouble that comes from them but if you do it shouldn't be something you regret for life."
Law Commission Professor John Burrows said the proposed law against "maliciously impersonating another person" would not block satirical accounts.
"There's always room for satire, there's always room for good-natured imitation but we're talking about things that cause genuine harm to other people, like a false Facebook page linking a woman to a prostitution organisation."
In the other major strand of the commission's work it has proposed sweeping changes to regulation of the news media with a single, independent watchdog that would replace the Press Council and Broadcasting Standards Authority.
News media could only continue to enjoy privileges such as access to closed court proceedings and exemptions from some legislation - including the Privacy and Defamation Acts - if they submitted to the proposed new body.