BTopenworld has tightened up helpdesk practices that allowed users to bypass security checks and gain passwords for other people's accounts.
The internet service provider (ISP) apologised for the errors, revealed by news website ISP Review, and said that staff had been retrained on the importance of customer confidentiality.
A spokesman emphasised that this had been an isolated incident and that it was "very rare" that the firm issued new passwords.
BTopenworld said in a statement: "Thankfully this is a rare occurrence and we apologise for the error. We have reiterated the great importance of security to all of our helpdesk agents, and revisited this aspect of their training with them.
"Password security is a major priority for BTopenworld, so that customers feel confident using our services. It is not usual practice for our helpdesk to volunteer passwords."
The ISP explained that its policy is for helpdesk agents to validate the identity of a customer before discussing or amending any details.
It gives customers three chances to be identified. Firstly a password, then mother's maiden name if the user can't remember the password. As a last resort a 'helpdesk phrase' taken from the customer during registration is asked for.
BT said: "In an extreme example where [all three] have been forgotten, the helpdesk agent will take further action depending on the type of account.
"BT Anytime customers will be called back by a manager who will confirm other details relating to the account. BT SurfTime customers must confirm their telephone account number.
"Pay as you Go customers will have to send an original utility bill, bank or credit card statement to the helpdesk where a new password will be dispatched by return post."
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