Broadband speeds in the UK now average 6.8Mbps (megabits per second) but there is still a huge gap between advertised and actual speeds, according to Ofcom.
Almost half of broadband users are now on packages with advertised speeds above 10Mbps but few achieve this.Ofcom's biannual report into the state of the broadband market urged changes to advertising.
Virgin Media accused rivals of misleading the public.
The report found that the average broadband speed has increased 10% in the last six months as more people try out fast services.
But the gap between advertised and actual speed has widened in the same period. The average advertised speed was 15Mbps, 8.2Mbps faster than the average actual speed.
It also found that more than a third of customers on services advertised as "up to" 24Mbps actually received speeds of 4Mbps or less.
"The research is still telling us that some consumers are not receiving anywhere near the speeds that are being advertised by some ISPs," said Ofcom chief executive Ed Richards.
The watchdog is urging changes in advertising guidance "so that consumers are able to make more informed decisions based on the adverts they see".
Superfast broadband is now available to 57% of UK homes, the report finds.
But three-quarters of broadband services are still delivered via copper-based ADSL technologies, which will always have speed limitations based on the distance between the home and the telephone exchange.
Other factors that slow down a connection include the quality of the wiring in a house and the time of day that the service is used.
Virgin Media is the only ISP able to come close to advertised speeds because cable services are not influenced by distance.It has spearheaded the campaign to change the way broadband is advertised.
Jon James, executive director of broadband for Virgin Media, said: "The gulf between what's advertised and what speeds customers get continues to grow."
"We remain concerned that people paying for fast broadband are still being misled and believe it is absolutely essential that consumers have all the information they need to make an informed choice," he added.
The Advertising Standards Authority (ASA) is currently reviewing broadband advertising. Its report is expected in the next few months.
In a bizarre twist, last month it ruled that Virgin Media's campaign against false advertising itself broke advertising rules.
Andrew Ferguson, co-founder of broadband news site ThinkBroadband thinks more needs to be done to explain the differences between cable and ADSL but is not sure changes to advertising is the correct way.
"Adverts will shift to lifestyle advertising rather than actual facts, and some people may be denied access to products because they would drag the average speed down," he said.
Ofcom has introduced a code of practice to help inform the public about their likely speed before signing up to a service.
It recommends that broadband customers should be given a speed range rather than a single estimate of the maximum speed on their line.
It also suggests that users be allowed to leave their provider without penalty if they receive a maximum speed which is significantly below estimates.
So far, Virgin Media, BT, O2 and Sky have signed up to the code.
Michael Phillips, of comparison website broadbandchoices, is not sure the code goes far enough.
"Ofcom's code of practice has made some steps in the right direction, but without some more careful thought, there's still room for a lot of confusion.
How will my mum know if a service offering 1Mb - 6Mb is better or worse than one providing 2Mb - 5Mb? She needs to know what speed she's most likely to receive most of the time," he said.
He thinks that 'typical speeds' should be made "the gold standard for speed advertising in the same way that banks use 'typical APR' percentages".
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