In most countries, downloading copyrighted material is a civil offence, meaning those found guilty are subject to fines but jail terms do not apply.
Anyone found to have downloaded illegal material and made copies could face a prison sentence of up to two years or a fine of two million yen (?16,000).
According to a report by Wired magazine, the law reform is still to gain approval from the upper house, but it could come into force by the start of 2013.
However, the issue is a contentious one, with one member of the lower house speaking out against the proposed law changes.
"The illegal flow of material is a problem, but rather than strengthening the penalties, we should bolster the deletion of illegally uploaded content," the news provider quoted Takeshi Miyamoto saying.
Last month, a Japanese man became the first in the country to be arrested on suspicion of video piracy after he was found selling the illegal Majikon cartridges that allow Nintendo DS users to play pirate games.
Written by Susan Ballion
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