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When it was discovered that those CDs had never reached their destination the information was posted again – this time by recorded delivery, but still against protocol.

The loss was not reported to senior Revenue management until November 8 - three weeks later. Mr Darling said he was informed on November 10 and, on November 14, he ordered the police to be called in.

An identical lapse in security procedure was detected at the HMRC in March. On that occasion the CD happened to reach the NAO safely. The Data Protection Act, passed by the Labour Government, demands that far more stringent security measures are put in place.

Vince Cable, the acting Liberal Democrat leader, said: “The Treasury and its agencies have replaced the Home Office as the department in government which is most ‘unfit for purpose’."

The Chancellor claims that the delay in publicising the latest error was requested by the banks who wanted to prepare their response before alarming the public.

He sought to assure potential victims of identity theft that they would be recompensed in the event of any bank account losses.

Mr Darling announced that the Independent Police Complaints Commission, who monitor the HMRC, would launch an investigation into the loss, but insisted: “There is no evidence this data has reached the wrong hands. There is no evidence of fraud or criminal activity.

“Banks and building societies are putting in place safeguards to protect people’s accounts. No one will suffer any loss if they are an innocent victim of fraud.”

The Metropolitan Police confirmed it is investigating the lost data and reports have suggested that police visited Child Benefit offices in Waterview Park, Tyne and Wear. A Scotland Yard spokesman said it was assisting Northumbria Police with the inquiry.

The scale of the scandal made it virtually inevitable that Mr Gray, who is highly thought of in Whitehall, would resign.

In his resignation letter, circulated to all Revenue staff, he wrote: "I am announcing today that I will be standing down as HMRC Chairman as a result of a substantial operational failure in the Department.

"This is not the way I would have planned to organise my departure from HMRC. I had hoped to be around for a while longer and to have had the continuing privilege of leading HMRC towards the vision we have been developing.

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