Four out of five members of the public are in favour of a biometric identity card, according to the Home Office, but critics have warned that the cards will face security problems and will be hard to implement.
The Home Office is conducting trials of smart cards with the UK Passport Service using iris scanning.
It claimed that 81 per cent of 450 trialists were in favour of its use, and 64 per cent were in favour of a scheme where everyone needed a card to access government services.
The Home Office added that 45 per cent of trialists had only positive things to say about the cards, and that most concerns were based around security.
Speaking at a Privacy International conference, Home Office minister Lord Falconer insisted that the cards could cut fraud, tackle illegal working and immigration and improve access to government services.
The Home Office is considering a central database alongside the cards, to hold details such as name, address, date and place of birth and gender. This is designed to cut duplication and errors across government.
But other data would be held by departments in separate databases. "There would not be one government database that contained all information on the population held by all departments," said Lord Falconer.
He explained that facial recognition, fingerprints and iris scans are all being considered as potential identification methods, but admitted that no system would be completely secure.
"There is no such thing as absolute security," said Lord Falconer. "We recognise that there are risks, but if you don't have these databases you have worse problems."
However, Dr Ross Anderson, of the Computing Laboratory at Cambridge University, warned: "Biometrics are not as infallible as people think, and smart cards are easier to forge than you might think."
He added that there is also a danger in giving control over the project to any one organisation. "The company that gets the franchise will have the UK over a barrel," he said.
And Peter Lilley MP, former Conservative Secretary of State for Social Security, who introduced the ill-fated Pathway benefits card which cost the government £700m before being abandoned, warned that there could be a similar fate ahead for the entitlement cards.
"If the government cannot get a benefits payment card to work for benefits recipients, how can it get a card to work for 60 million people, a proportion of whom will not be happy to have it?" he asked.
The Home Office consultation runs until 31 January.
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