Ministers say the scheme - which will be endorsed by Tony Blair today - is aimed at improving public service delivery. But it faced protests that it was dealing another blow to personal privacy by creating a "snooper's charter" and enabling thousands of civil servants to access sensitive information with ease.
Two months ago Richard Thomas, the Information Commissioner, warned that Britain was "waking up to a surveillance society that is already all around us". But ministers dismiss such fears and are pressing ahead with the world's most ambitious identity scheme, as well as a rapid expansion of the DNA database. Details of all children will be held in a single register to be launched next year, medical records are being transferred to a central NHS database and plans are being examined to track motorists' movements by satellite.
The idea of sharing personal details between departments follows a review of public services designed to make them more efficient. Ministers reached the conclusion that data protection rules limiting access to information about adults were too tight.
John Hutton, the Work and Pensions Secretary, cited an incident yesterday where a bereaved family were contacted 44 times in a six-month period by different parts of his department to confirm details of an accident. Mr Hutton said: "The Government already stores vast amounts of data about individual citizens, but actually doesn't share it terribly intelligently. There is room for improvement."
The Government intends to legislate later this year to ease the curbs on data-sharing between departments. It is also refusing to rule out the idea of a single "super-database", where everything from benefits and pensions records to information on motorists and TV licence payments are stored. More details are expected to be announced by the Prime Minister today.
Shami Chakrabarti, the director of Liberty, said: "This is an accumulation of our Government's contempt for our privacy. This half-baked proposal would allow an information free-for-all within government - ripe for disastrous errors and ripe for corruption and fraud."
Phil Booth, the national co-ordinator of the anti-ID group No2ID, warned of the danger posed by "the development of government surveillance of the population through computer records". He added: "It can be stopped, if only people stand up and say they have had enough."
Sir Menzies Campbell, the Liberal Democrat leader, said: "Blair's Britain now has the most intrusive government in our history. It's time we put a halt to this."
The Tories ridiculed the proposal in the light of the Government's record on managing databases, citing failures in the Sex Offenders Register, the Criminal Records Bureau, and recent problems tracking criminal records from overseas.
David Davis, the shadow Home Secretary, said the ID cards database was likely to be a "white elephant" costing £20bn, and the money could be better spent on policing or border controls.
Oliver Heald, the shadow Constitutional Affairs Secretary, told the BBC that ministers were "moving one step closer to a Big Brother state". He warned against the Government being able to "set up a database from the cradle to the grave".
He asked: "Are they going to have enough security with this massive new database to ensure it isn't hacked into and that identity theft doesn't occur?"
Ministers are convinced the proposal will win widespread public support, and Mr Blair will announce today that so-called "citizens' panels" will be used to gauge reaction to relaxing privacy procedures. The consultation is due to finish in March with ministers prepared to move swiftly after that to legislate.
The Government has repeatedly argued that the public is prepared to sacrifice small measures of personal liberty in return for improving safeguards against terrorism, crime and identity theft.
Critics say the cumulative effect of such initiatives, as well as the spread of store loyalty cards and Oyster travel cards, is to undermine privacy.
SUPER-COMPUTER
Tony Blair is expected to announce today that sensitive personal data could be swapped by Whitehall departments. Ministers believe restrictions on data-sharing between civil servants are too strict. A 'super-database' or 'super-computer' holding everyone's records would be similar to a planned children's database.
DNA DATABASE
The Prime Minister has suggested that the DNA of every British adult should be stored by the state. The national database already holds 3.7 million samples, 6 per cent of the population, far higher than any other country. More than one million have been taken from people never convicted of an offence.
CCTV
The British are among the world's most observed people. Some 4.2 million closed-circuit television cameras record our every move - one for every 14 people and more per head than any other country in Europe or North America. The average Londoner can be caught on camera 300 times a day.
MEDICAL RECORDS
Millions of medical records are to be transferred to a central NHS database, allowing staff anywhere to access patients' information. People who object will not be able to opt out. The most personal information will be available to hospital managers, IT departments, high street pharmacists and civil servants.
IDENTITY CARDS
The first identity cards will be issued next year to foreign nationals and from 2009 to UK citizens. Anyone who renews a passport will be forced to register and the Government aims to make ID cards compulsory within six years. Fifty-two pieces of information, including fingerprints and iris scans, will be held.
SPY IN THE SKY
Motorists are already monitored through the soaring number of road cameras. In an effort to cut congestion, the Department of Transport is examining plans to use satellite technology to keep tabs on every vehicle's exact movements. Motorists, forced to have a black box fitted in their cars, would be billedfor every journey they make.
Growth of surveillance
1984: DNA fingerprinting method discoverd by accident by Sir Alec Jeffreys
1985: Outdoor CCTV camera erected in Bournemouth
1994: Government paves the way for huge expansion of CCTV
1995: The world's first National DNA Database established in England and Wales.
1999: Tony Blair gives a sample of his DNA
2001: Sir Alec Jeffreys calls for profiles of entire UK population to be held
2004: Number of DNA profiles hits the two million mark
2004: Information Commissonaire Richard Thomas warns that Britain is 'sleepwalking into a surveillance society'
2005: MPs vote to introduce identity cards
2006: National Black Police Assocation call for inquiry into why black people are over represented on DNA database
2006: Identity Cards Act becomes law
2007: Data-sharing by Whitehall departments likely to be introduced
2008: Foreign nationals will have to start supplying fingerprints, eye or facial scans added to a National Identity register
2008: Children's database, covering all under-16s in England and Wales, will be launched
2009: The first biometric identity cards will be issued to British citizens when they renew their passport
2010: NHS Database will store the records of 50 million patients providing details over the internet
2012?: ID cards compulsory
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