The personal and bank details of 25 million people - almost every child in the country as well as their parents and carers - have been lost by HM Revenue & Customs, the Government admitted today.

Names, addresses, dates of birth, employment and bank details all went missing when two CDs containing the information were mislaid.

Alistair Darling told the House of Commons that the discs containing the highly sensitive information failed to arrive after they were sent in the ordinary internal mail between government departments.

MPs gasped as they heard the scale of the catastrophic breach of security guidelines.

The Chancellor admitted that HMRC had made the same mistake on several occasions in the past six months.

Mr Darling said that he was informed of the security breach ten days ago and, four days later, asked the police to investigate.

Paul Gray, the chairman of the Revenue, resigned today as the blunder became public knowledge and Opposition leaders have called on the Chancellor to consider his own position.

George Osbourne, the Shadow Chancellor, attacked Mr Darling for "lurching from one crisis to another" during his reign at the Treasury.

“Let us be clear about the scale of this catastrophic mistake,” he said. “His department has compromised the security and safety of every family in the land.”

Derisive laughter from MPs had met Mr Darling's admission: "I regard this as an extremely serious failure.". He advised every parent who claims Child Benefit to look very closely at their bank statements in the coming weeks for signs of fraud or identity theft.

The Chancellor said: “The whole House will agree that the way in which this has been handled was inexcusable. HMRC has well laid down established procedures which were breached. There is no excuse whatsoever for breaching these.”

On October 18, CDs carrying the personal details of every Child Benefit claimant were sent to the National Audit Office by a junior member of HMRC. The package was not recorded or registered.

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