The move is an attempt to break with the previous Labour government which was accused by critics of trying to legislate in every area of public life and of creating what a hostile British press called a "nannystate."
Launching the initiative, deputy prime minister Nick Clegg said public debate always produced the best ideas.
"So be demanding about your liberty, be insistent about your rights. This is about your freedom, and this is your chance to have your say," Clegg said, according to an advance excerpt of his speech.
The "Your Freedom" website will ask Britions which laws they would like to remove because they restrict civil liberties, which laws they thought were unnecessary, and how businesses and charities could be freed from red tape.
The answers will feed into a Freedom Bill to be put before parliament later this year.
Clegg leads the Liberal Democrat party who took office in May in an unusual coalition with the larger Conservatives, ending 13 years of Labour rule.
Their coalition plan included a section on restoring civil liberties, promising to regulate the use of closed circuit TV which monitors activities on many British streets and to protect freedom of speech and the right to protest.
Justice Secretary Kenneth Clarke announced plans on Wednesday to send fewer criminals to jail to try to save money and cut reoffending rates.
Britain faces an era of grinding austerity as the government strives to eliminate a large chunk of a record peacetime budget deficit over the five-year parliament.
The coalition is hoping to encourage citizens' groups to spring up with initiatives that fill in some of the gaps left when the state is forced to retrench. Prime Minister David Cameron coined the term "Big Society" for his plans during the election campaign but the concept left many Britons baffled.
