Secret personal details of Britain's most dangerous criminals have been lost by the Government.
The public could now face an enormous bill to protect paedophiles, rapists, drug runners and killers from vigilantes or rival gangsters.
The names, addresses, details of convictions and even jail release dates of almost 130,000 people were all in Home Office files lost when a computer memory stick went missing.
'Livid': Home Secretary Jacqui Smith with a group of special constables on Wednesday. She learned of the missing data the day before
It was being used by an employee of a private contractor working for the department.
The astonishing security blunder plunges Home Secretary Jacqui Smith, who was told of the scandal on Tuesday, into the greatest crisis of her career.
Miss Smith informed the Metropolitan Police – who are now frantically hunting for the portable data storage device – but chose not to tell the public immediately.
It took the intervention of a whistleblower for details to emerge. The delay is likely to lead to damaging questions for the Home Secretary, whose mood last night was described by aides as 'livid'.
The Office of the Information Commissioner said the data – a list of all 84,000 prisoners in England and Wales, plus details of 43,000 most serious and persistent offenders – was a 'toxic liability'.
Tory spokesman David Ruffley warned of huge costs for taxpayers if criminals sue the Home Office for breaching their privacy and the Data Protection Act.
Another blunder: The Home Office are already responsible for losing sensitive information including the details of child benefit claimants
Mr Ruffley added: 'This shambles proves this accident-prone Home Secretary hasn't even got a grip of what goes on in her own building. Taxpayers will be absolutely outraged if they are made to pick up the bill for compensation to serious criminals.'
It is the latest in a string of cases where the Government has lost highly-sensitive data, most seriously the personal details of 25million child benefit claimants.
The latest shambles centres on a Whitehall project known as JTrack, to share details of the country's worst offenders.
A private firm working on the project, PA Consulting, was sent the convicts' personal details by the Home Office.
An employee of the company – which has Government contracts worth millions and has worked on the highly-sensitive ID cards project – placed the data, unencrypted, on the memory stick, which went missing at an unknown location.
The Home Office was told on Monday and Miss Smith informed on Tuesday. Officials are desperately hoping the data on the stick, worth many thousands of pounds to criminals, does not fall into the wrong hands or be made public.
The worst-case scenario is having to protect notorious criminals – such as sex offenders – at risk of vigilante attack.
Criticism: Shadow Home Secretary Dominic Grieve (left) and Tory spokesman David Ruffley have slammed the Government for their latest mistake
There are also fears of rival criminals, such as drug dealers, using the information to settle old scores, possibly even waiting in ambush outside prison gates.
Protecting these villains could cost millions and place an enormous strain on police resources.
But changing release dates would cause mayhem in crowded prisons. There is even the prospect of gang bosses obtaining the data and using it to recruit convicts with useful skills.
Shadow Home Secretary Dominic Grieve said: 'This is a massive failure of duty. What is more scandalous is that it is not the first time that the Government has been shown to be completely incapable of protecting the integrity of highly sensitive data, rendering them unfit to be charged with protecting our safety.'
David Smith, deputy commissioner for the Information Commissioner's Office, said: 'It is deeply worrying that after a number of major data losses and the publication of two government reports on high-profile breaches of the Data Protection Act, more personal information has been reported lost.
'It demonstrates that personal information can be a toxic liability if it is not handled properly.'
The Home Office said: 'Arrangements were in place for data to be sent securely to the contractor, in a fully encrypted form to a secure location. It appears that an employee of the contractor then transferred the data to an insecure memory stick.
'All transfer of data has been suspended pending investigation.'
PA Consulting had no comment last night. The company, which has 3,000 employees in 35 countries, was paid a reported £2million a month by the Passport Service for its work on ID cards.
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