
According to the IPPR, UK laws currently make criminals of "millions of Brits each year" using iPods and other MP3 players to copy CDs onto computers in MP3 format.
"British copyright law is out of date with consumer practices and technological progress," said IPPR deputy director Dr Ian Kearns.
"Giving people a legal 'private right to copy' would allow them to copy their own CDs and DVDs onto their home computers, laptops or phones without breaking the law."
The report has been released in advance of the Gowers Review of Intellectual Property set in place by Chancellor Gordon Brown of the UK's 300 year-old copyright laws.
The review is being chaired by former Financial Times editor Andrew Gowers, and is scheduled to report sometime in autumn 2006.
It will make recommendations on the instruments (patents, copyrights etc) and the operations for granting the instruments.
However, recording artists including Cliff Richard have expressed dismay over another significant recommendation of the IPPR report, which calls for the government to reject calls from the music industry to extend the copyright term for sound recordings beyond 50 years.
Richard has campaigned hard for an extension to 70 years, just as some of his most famous recordings are about to come out of the 50-year copyright period.
The report also enters into the digital rights management arena, which could affect access to digitised e-book content, especially for disabled users.
The report calls for greater flexibility in the publishing industry towards electronic content, especially for libraries.