The confidential details of 25 million Britons have been lost, raising the possibility of mass identity fraud.  The information contained on two computer disks went missing whilst in transit from one government office to another.

MPs gasped as Finance Minister Alastair Darling apologised to Parliament for the breach and revealed the scale of the loss in an emergency statement to the Commons.

The Metropolitan Police is now leading the hunt for the two password-protected discs and trying to discover how they went astray in transit from benefit headquarters in Newcastle to the National Audit Office (NAO) in London.

The discs contain details including names, addresses, dates of birth, Child Benefit numbers, National Insurance numbers and bank or building society account details.

Mr Darling said they should not even have been sent in the first place, as a junior official breached all Her Majesty’s Revenue and Customs standing procedures by transferring them via couriers TNT to the NAO.

The Chancellor stressed there was no evidence that they had fallen into criminal hands and said the public would be protected against any fraud by the Banking Code.

He told MPs:

“The missing information contains details of all Child Benefit recipients: records for 25 million individuals and 7.25 million families. These records include the recipient and their children’s names, addresses and dates of birth. It includes Child Benefit numbers, National Insurance numbers and, where relevant, bank or building society account details.”

Paul Gray, chairman of her Majesty’s Revenue and Customs (HMRC), which lost the discs containing the Government’s entire Child Benefit database, has resigned over the affair.  He informed the Secretary to the Cabinet and Head of the Home Civil Service, Sir Gus O’Donnell, of his intention to step down from his post.

Mr Gray’s decision follows the statement by the Chancellor to Parliament about a loss of data from the Department.

Island Pulse.