Gordon Brown attempted to introduce prison terms of up to two years for the offence when he was in power.
But the law was never enacted amid concerns from newspaper bosses.
Daily Mail editor Paul Dacre said at the time that the "frightening amendment" would "have a truly chilling effect on good journalism".
But in a speech earlier on press freedom, Mr Clegg said it was time to think again in the light of recent revelations about the alleged behaviour of journalists - and investigators hired by them - at News International.
'Under review'Mr Clegg said: "On the issue of selling confidential information to journalists specifically, a whole range of professions have been implicated.
"Not just the police, but also private investigators, medical professionals and phone companies. Under the current law, for fraud and phone hacking you can go to prison.
"Whereas, under Section 55 of the Data Protection Act, unlawful use of personal data can get you a fine.
Continue reading the main storyWe want to get to the root cause of blagging - the incentive for stealing information and selling it on”End Quote Information Commissioner's Office "The Information Commissioner recommended in 2006 that that offence should also attract a custodial sentence.
"It wasn't taken up then, and this government has said it will keep it under review.
"I think that now - where it cannot be proved that information was obtained in the public interest - there is a case for looking at this issue again."
Knowingly or recklessly obtaining or disclosing personal information without consent is an offence under Section 55 of Data Protection Act 1998.
However, the act also offers a defence, which is available to anyone who shows that obtaining, disclosing or procuring the information was in the public interest. The public interest defence has never been tested in court.
'Root cause'Mr Clegg's announcement was welcomed by the Information Commissioner's office, which has been calling for tougher penalties for breaking the Data Protection Act since 2006.
"We believe a custodial sentence is necessary. If it goes to magistrates court, the maximum fine is ?5,000 and that can easily be written off as a business expense," said a spokesman.
"We want to get to the root cause of blagging - the incentive for stealing information and selling it on.
"We believe the threat of a custodial sentence will stop the problem overnight."
Continue reading the main storyThis legislation would have made Britain the only country in the free world to jail journalists and could have had a considerable chilling effect on good journalism”End Quote Paul Dacre Daily Mail editor in 2008 In a 2008 speech to the Society of Editors, Daily Mail editor Paul Dacre described how he had persuaded then Prime Minister Gordon Brown to rethink the proposals to protect press freedom.
He said: "The fourth issue we raised with Gordon Brown was a truly frightening amendment to the Data Protection Act, winding its way through Parliament, under which journalists faced being jailed for two years for illicitly obtaining personal information such as ex-directory telephone numbers or an individual's gas bills or medical records.
"This legislation would have made Britain the only country in the free world to jail journalists and could have had a considerable chilling effect on good journalism.
"The prime minister - I don't think it is breaking confidences to reveal - was hugely sympathetic to the industry's case and promised to do what he could to help.
"Over the coming months and battles ahead, Mr Brown was totally true to his word."
'Knee-jerk'In May 2006, the Information Commissioner exposed the trade in details about people's lives - and said journalists were among the main customers.
The report revealed that 305 journalists had been identified during one investigation - Operation Motorman - as customers who were driving the illegal trade in confidential personal information.
It found nine magazines and 22 newspapers had regularly used a private investigator to access illegally-obtained information. A subsequent Freedom of Information request showed where the journalists were employed.
The Daily Mail used the private investigator the most, clocking up 952 transactions - almost five times that used by the News of the World (NoW), the now-defunct newspaper that started the phone-hacking scandal.
The Criminal Justice Act of 2008 provides for a maximum two-year sentence for illegally obtaining personal information without its owner's consent.
It is on the statute book but has never been enacted, meaning it can not be used by judges or magistrates.
A Ministry of Justice spokesperson said: "The government is keeping the matter of penalties for offences committed under section 55 of the Data Protection Act 1998 under review."
Mr Clegg also used his speech to urge politicians to "resist any temptation to impose knee-jerk, short-sighted restrictions on the media" in the aftermath of the scandal surrounding News International.
The government has launched a judge-led inquiry into press conduct, after allegations of phone hacking and payments to the police.
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