Government entitlement cards will be the target of organised criminal gangs, according to privacy and fraud experts.

The Home Office has published a consultation paper outlining options for the cards, including the use of existing driving licences and UK passports, and issuing new cards to people who carry neither.

The Home Office confirmed that it has rejected the idea of compulsory cards and any changes to police powers.

Home Secretary David Blunkett said: "I am not going to disguise my own enthusiasm for an entitlement card system, but it is for the public to decide whether or not this is something they would see as useful and making their lives easier.

"As criminals become increasingly sophisticated at stealing or forging identities we have to position ourselves to respond, using biometrics and cutting edge technology as one way to defeat them."

But watchdog Privacy International has warned that the cards will create new opportunities for criminal gangs and corrupt officials, and will increase the problem of false identities.

Privacy International director Simon Davies said: "The technology gap between governments and organised crime has now narrowed to such an extent that even the most highly secure cards are available as blanks weeks after their introduction."

Because entitlement cards will give access to services, gangs will see them as a worthwhile target.

"A high-value card attracts substantially larger investment in corruption and counterfeit activity," said Davies. "The equation is simple: higher value ID equals greater criminal activity."

Banking and credit card companies are well motivated to sort this out, but they haven't been able to stop the growth of fraud, and the government is unlikely to step in with the perfect solution, according to Peter Dorrington, head of fraud at SAS UK.

"The entitlement card would be the Holy Grail for fraudsters," he explained. "If they can get hold of a card, or decrypt one, they have access to someone's entire life. They will be much more valuable than credit cards."

Dorrington added that it already possible to get fake credit cards that can only be uncovered by a detailed analysis of the hologram, and crooks can set themselves up with credit card pressing machinery for a few thousand pounds.

"With credit cards we are already aware of the interest of organised crime. They have people with PhDs looking at getting around security mechanisms," he said.

"You can charge a lot of money to create an identity. There are people out there already that are producing them and identity theft is the biggest problem for financial fraud.

"[Entitlement cards] do very little for people who are the least bit knowledgeable about how to commit fraud."