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The Royal Navy careers officer who lost the data is believed to have worked at a recruiting office in Birmingham. He is expected to be court-martialled.

But the internal probe will need to focus on several issues which are certain to be raised by MPs:

Why was the personal data on the laptop in the first place, why was it left overnight in a car, and why was personal data unencrypted so that a thief needed only to access the computer to read the data.

Information Commissioner Richard Thomas said he would be demanding answers from the MoD over the loss of the data and why it was unencrypted.

"We will require satisfactory answers from the MoD about their data protection practices and a firm assurance that steps have been taken to improve these practices before deciding on the appropriate action to take," he said.

Fox said that following the loss of two Revenue and Customs computer disks containing 25 million child benefit records the theft of the MoD laptop was part of a much wider issue.

"This is a question that affects the whole government,” he said. “This is about the bigger issue of a govenment which collects large amounts of information on its citizens and is not putting in adequate measures to protect it."

Nick Harvey, Lib Dem defence spokesman, said the loss of the data provided further evidence of the dangers of proposals for a national ID card system.

"Surely this would worry anybody into realising that you cannot trust any system you invent to store this much data in one place," he said.

Douglas Young, of the British Armed Forces Federation, said there had to be a “top level investigation” into the whole affair. "It really is very, very worrying and I'm deeply concerned to hear this.”

Philip Wicks of the Morse security consultancy, said it was shocking that the incident should occur despite the previous widely reported losses of government data on individuals.

“This incident once again highlights the need for organisations to think long and hard about the data they allow employees to take off site on laptops and mobile devices,” Wicks said.

“The MOD should definitely have policies and procedures in place that dictates what information can and can’t be taken off the premises. At a minimum they should make sure that personal and sensitive data on laptops is always encrypted.”

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