The proposals are contained in a bill submitted to parliament by Turkey's family and social policy ministry and are the latest in a string of government moves testing freedom of expression in the aspiring EU member state.
The draft legislation will allow the authorities to block keywords deemed problematic and limit access to video-sharing websites that include them, the source said.
It will allow officials to keep a record of all activities of Internet users for two years and monitor which websites they have visited, which keywords they have searched for and their activities on social networking sites.
In December, Google released data showing that Turkey topped the Internet giant's content removal request list.
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But the ruling Justice and Development Party (AKP) rejected comparisons with China, which is notorious for its Internet censorship.
"Turkey is not China and will never be like China in this manner," party spokesman Huseyin Celik told reporters on Tuesday.
"Aren't we all in agreement on having some laws about social media and Internet media? There can be regulations based on world standards anywhere in the world," he said.
During the mass anti-government protests in June, Prime Minister Recep Tayyip Erdogan called Twitter "a menace", denouncing protesters who turned to social media for information on the unrest.
In December, the US-based Committee to Protect Journalists described Turkey as the world's number one jailer of journalists for the second straight year, ahead of Iran and China.