The Government's plan for identity cards suffered a double blow this evening after Lords ordered a detailed investigation into the cost of the scheme and demanded a more secure method of recording and storing citizens’ personal information.

Peers voted by 237 to 156, a majority of 81, on an amednment ordering an inquiry to put a precise figure on the revenue and capital costs of implementing the controversial Identity Cards Bill.

The Government suffered a second defeat when peers voted by 206 to 144, a majority of 62, to demand a secure and reliable method of recording and storing citizens’ personal data.

Ministers must now either agree to the investigation or ask the Commons, where an earlier backbench revolt slashed Tony Blair's majority to just 25, to overturn the Lords' demands.

The Lords' debate centred on a London School of Economics report which claimed the scheme would cost up to £19 billion - more than 30 times the Government’s estimate - and that the cost of an individual ID card could be high as £300.

The Government says that a passport and ID card together would cost no more than £93 and that a stand alone ID card, which could be used for travel in the EU, would be £30.

Today's Lords vote will delay the progress of the Bill which insiders say was the brainchild of Tony Blair and David Blunkett and is likely to be quietly dumped when, or if, Gordon Brown succeeds as Prime Minister.

Tory and Liberal Democrat peers rejected Government claims that details of the financial implications could not be discussed openly because of the need for confidentiality.

Baroness Noakes, for the Tories, told the House: "The Government say the annual costs are £584 million. The London School of Economics report put the figures over ten years at around £10 billion to £19 billion."

Lady Noakes said: "This amendment is about transparency and openness in Government, and I do not believe that the Government have demonstrated those qualities in connection with this Bill."

She added: "Parliament deserves better. We must give the Commons the opportunity to approve the costs and the benefits and to decide themselves about affordability."

The Home Office Minister, Baroness Scotland of Asthal, rejected what she described as "the flawed amendment", and said: "I simply do not accept that there should be any such unprecedented review of the estimated costs of the ID card scheme. I simply do not think that that is necessary."

In the Commons, Charles Clarke defied backbench calls to look again at the plans and insisted, to Tory jeers, that ID cards were gaining support among the public.

He said: "Identity fraud costs the economy at least £1.3 billion a year and the evidence shows that the threat is rising. The ID card scheme will tackle the problem by recording biometric information so that we are able to detect people who try to register multiple identities to commit fraud or for other worse purposes.

"It is a critical measure to enable us to provide security for the people in this country and we shall proceed with it.

Mr Clarke added: "As the arguments about both costs and about the security of the system and the need for it have become more widespread and better understood, support for ID cards has increased.

Support among Labour backbenchers, however, was apparently ebbing away.

At question time, Labour’s David Winnick (Walsall N) told Mr Clarke: "Can I suggest in the friendliest way possible that perhaps it might be useful if the whole issue of identity cards was looked at again in the Cabinet."

The former Tory Cabinet minister John Redwood (Wokingham) said: "Given that the Government has issued more National Insurance numbers than there are people eligible to receive them and, given the very active market in illegal passports, why should we believe they’ll get it right this time and why can’t they get it right in those other important cases?"

Lord Phillips of Sudbury, a Liberal Democrat frontbench spokesman, warned: "Despite the novelty, scale and civil libertarian importance of the ID scheme, we have received nothing more as yet beyond the estimate of the annual running costs of the Home Office alone.

"I wouldn’t be as adamant about this ... were it not that what information we have had, has been extracted with as much difficulty as if we were pulling the Prime Minister’s teeth."

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