Justice Secretary Jack Straw last night ordered an urgent inquiry after it emerged that a private contractor had lost a portable hard drive holding personal details of thousands of prison workers.
The huge US firm Electronic Data Systems (EDS) has owned up to losing the names, dates of birth, National Insurance numbers and prison service numbers of up to 5,000 employees of the National Offender Management Service.
It was revealed last night that EDS staff only realised the data was missing in July. But while the company immediately reported the loss to the Prison Service, Mr Straw only found out yesterday, after a letter about the missing drive was passed to a newspaper. He said he was "extremely concerned".
Opposition politicians condemned the "serious breach in security".