The National Identity Scheme could be at risk of fraud from the people running it, a Government-appointed panel has warned.

In its 2007 annual report, the Independent Scheme Assurance Panel (ISAP), set up to advise the Government on the implementation of ID cards, said the scheme would “aggregate a lot of valuable data”.

The panel said there was the “risk that it’s trusted administrators would make improper use of this data” and the scheme would “be subject to data errors and errors in decisions made”.

Richard Clayton, a security expert at Cambridge University, said: “The problem with this and all other databases that contain sensitive information is the honesty of staff.

"If you wave enough money at people working on this scheme, how many will actually be honest."

Clayton pointed out the report also found that the Government had no clear data-management standards for the National Identity Register. This is the proposed database that, according to the Government, will hold all UK citizens' identity details securely.

“One of the problems of the whole scheme is that there is too much information in one place,” he said.

“The single point of this scheme means a fraudster obtaining the information will be set up for life. They will not have to look for or pay for any other documents.”

To minimise the risk of staff stealing and selling on people’s data, the ISAP said the Government had to monitor individual staff members and how they were using data.

The Identity and Passport Service, the department in charge of the ID Card scheme, said it welcomed ISAP's recommendations. It said it would identify the right people to govern the data and work to get a clear view of the relationships between all the data held as well as the relevant legislation and policy.