There are a number of excellent resources available to assist you with protecting your children online.
The following links will help you to keep children safe, and also allow them to behave responsibly in the online portions of their lives:
CEOP are the UK Police’s taskforce for online safeguarding. “ThinkuKnow” is their website.
Childnet have an interactive presentation on the subject, available here.
The UK Safer Internet Centre have a wealth of resources available to parents on their website.
Internet Matters provide a series of handy, guides – broken down by age range.
The NSPCC have a number of good quality resources now to assist you with this topic.