The Ministry of Defence (MoD) has admitted to the loss of 658 laptops and 121 USB data drives since 2004, a far greater number than had been admitted earlier.
The loss was reported by Liberal Democrat MP Sarah Teather after a parliamentary question was tabled. So far only 32 laptops have been recovered.
The size of the losses is at odds with earlier reports from the MoD and will raise questions over potential losses at other departments.
"It seems that this government simply cannot be trusted with keeping sensitive information safe," said Teather.
"It is frightening to think that secret MoD information can be lost or stolen. This shows a shocking degree of incompetence across the entire government."
Matthew Brown, vice president of products at data protection firm Workshare, said: "If an employee loses a laptop containing sensitive information it is likely that they will be quick to inform employers.
"When it comes to USB pens the story is different. Although many employees do not alert their organisation after losing a drive, the level of risk is just the same as a missing laptop."
The MoD has come under fire already this year for poor data security and admitted that it has lost 26 memory sticks containing classified information since January this year. It is not known how many of the lost items were encrypted.
Nick Lowe, regional director for Northern Europe at security firm Check Point, said: "We do not know if any of these devices or laptops were encrypted, but recent experience suggests that the majority were not.
"Even as recently as November 2007, only 48 per cent of public and private sector companies had any data encryption software in use, according to a survey we conducted.
"All we can hope is that these incidents will make organisations understand the real risks of data loss, and that it can and does happen to anyone. Data has got to be protected, for all our sakes."
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