So-called "free" web and app-based games for children are under investigation following concerns that users can run up substantial costs.
The Office of Fair Trading (OFT) said it was investigating whether children were being unfairly pressured or encouraged to pay for content in free games, such as upgraded membership or virtual currency in forms including coins, gems or fruit.
The investigation will look into whether these games include "direct exhortations" to children to do something that will require making a purchase, or to persuade their parents or other adults to make a purchase for them.
It will also consider whether the full cost of some of these games is made clear when they are downloaded or accessed.
The OFT has written to companies who offer such games asking them for information on how they market to children.
It is also asking parents and consumer groups for information about potentially misleading or commercially aggressive practices.
OFT senior director for goods and consumer, Cavendish Elithorn, said: "We are concerned that children and their parents could be subject to unfair pressure to purchase when they are playing games they thought were free, but which can actually run up substantial costs.
"The OFT is not seeking to ban in-game purchases, but the games industry must ensure it is complying with the relevant regulations so that children are protected.
"We are speaking to the industry and will take enforcement action if necessary."
Martin Lewis, the founder of MoneySavingExpert.com, said it was "disappointing" that apps aimed at children have been allowed to charge "ridiculous amounts" for extra features.
He pointed to one game, My Little Pony, which he said charged users £69 for some in-app purchases.
Mr Lewis said: "When games such as My Little Pony, which are obviously targeted at young children, bait kids with £69 purchases of a 'mountain of gems', something is going wrong in the system.
"What's really disappointing is it's been allowed to get this far. Apple especially makes a play of only allowing approved apps in its store.
"So why does it allow games that can be targeted at young children to charge such ridiculous amounts for in-app purchases?
"As always, an OFT investigation, even if it does advise action, will take time. So the most important message meanwhile is to protect yourself."
MoneySavingExpert.com said case studies reported on its forum included a seven-year-old who racked up a £69.99 bill on the College Girl app, a parent who was unaware their five-year-old had spent £65 on in-app purchases and a child who spent £80 on the Tiny Pets app.
Last month, Apple agreed pay out around £66m (\$100m) to settle a US lawsuit which claims children were improperly charged while playing iPad and iPhone games.
It was alleged that poor safeguards meant kids were easily able to buy extra features for the free games without their parents' knowledge or permission.
The tech giant agreed to give a £3.30 (\$5) credit to an estimated 23 million people who were affected. However, if parents can show they were charged more than £20 (\$30) then cash refunds will be offered.