The changes to Facebook come as a result of the social networking site's work with Canada's privacy commissioner Jennifer Stoddart, whose office has spent more than a year reviewing Facebook's privacy policies and controls.
that found "serious gaps" in Facebook's privacy policy, specifically when the website holds on to its users' personal information even after their accounts have been deleted.
Stoddart issued a 30-day ultimatum for Facebook to amend its data guidelines.
has responded and committed itself to making significant enhancements to the site, which will be implemented over the next 12 months.
One of the changes includes increasing the understanding and control a user has over the information accessed by third-party applications.
Currently, when users install a Facebook app, they are greeted by a pop-up box which asks them to allow the third-party app to access personal information. Once they give permission, the application can work.
However, under the proposed privacy changes, third-party applications will be required to specify the categories of information they wish to access and obtain express consent from the user before any personal data is shared.
In addition, the user will also have to specifically approve any access to their friends' information, which would still be subject to the friend's privacy and application settings.
Other changes that Facebook will be making include updating its privacy policy to better describe a number of practices. These include giving the reasons for the collection of date of birth, account memorialisation for deceased users, and how its advertising programmes work.
Facebook also said it would make it clear to users that they can delete their accounts, rather than just deactivate them, if they do not want their information kept indefinitely.
The site will also be encouraging users to review their privacy settings to make sure the defaults and selections reflect their preferences.
Elliot Schrage, vice-president of global communications and public policy at Facebook, said: "Our productive and constructive dialogue with the commissioner's office has given us an opportunity to improve our policies and practices in a way that will provide even greater transparency and control for Facebook users.
"We believe that these changes are not only great for our users and address all of the commissioners' outstanding concerns, but they also set a new standard for the industry."
Stoddart said: "These changes mean that the privacy of 200m Facebook users in Canada and around the world will be far better protected.
"We're satisfied that, with these changes, Facebook is on the way to meeting the requirements of Canada's privacy law."
The outcome of Canada's investigation into Facebook could influence the practices of other social networking websites, such as MySpace.
Stoddart said another major site has already approached her office to discuss its approach and she plans to release a paper in the coming weeks that analyses the practices of other social networking sites as well.
Work on Facebook's planned changes will begin immediately, but the firm said it anticipates the entire process to take about 12 months as it will need to allow for a comment period for users, a testing phase for the new Facebook API, and for third-party application developers to reprogram and test their applications.
Ethan Beard, director of platform product marketing at Facebook, said: "We strongly believe that the changes to the permission model for third-party applications will give users more confidence in Platform and will, thus, help ensure the long-term health and vitality of the ecosystem that has grown around Platform.
"We will be communicating regularly with developers about the changes and we're going to take our time to make sure the outcome is something users understand and that developers have ample time and notice to adapt."
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