Security experts have found a weakness in the technology to be used for the Government’s biometric ID cards, it is claimed.

A Dutch security company has successfully cracked the encryption on a prototype biometric passport, according to NO2ID, an anti-ID card lobby group.

Experts from Riscure security lab in Delft, the Netherlands, claim to have been able to "skim" the data from a passport at a distance of 11 yards using a hi-tech gadget. They then decrypted it on a computer within two hours, accessing personal information including fingerprints, a digital photograph of the passport-holder’s face and date of birth.

The proposed British ID card will use similar technology to store biometric information about every adult in the country.

News of the security breach came as the Home Office published new figures showing that identity fraud now costs Britain £1.7 billion a year, up 30 per cent in three years.

NO2ID said that unless the security flaws were successfully rectified on the British ID cards project, it could be an "absolute bonanza" for identity fraudsters.

The Conservatives, who oppose plans for ID cards, warned that the new biometric cards may not do what the Government claims.

"ID cards will not combat ID fraud - they may well make it worse," said Edward Garnier, the Tory home affairs spokesman.

"Independent experts say there is ‘a substantial body of evidence’ to show the establishment of ID cards could actually increase ID fraud rather than combat it. This has been borne out in the USA and Australia where criminals, by simply obtaining a single identity hub specific to that person, have been able to access all kinds of personal information.

"If a criminal cracked the ID card database - and the Government’s record on running IT-based projects does not inspire confidence - they would have access to a goldmine of information."

He went on: "Instead of playing on people’s fears about ID fraud, the Government should take the £15 billion the ID card system would cost and spend it on effective measures that will actually reduce fraud and combat terrorism."

But Andy Burnham, a Home Office minister, today defended the ID cards scheme and claimed that the £1.7 billion cost of identity fraud underlined the case for the Government’s controversial scheme.

"Of course it has got to work," he admitted. "Those questions will rightly be asked and the onus is on us to make it work.

"But what we have got to look at is the situation here in Britain today. And my argument is, it is the lack of high standard identification documentation that is providing this environment in which identity fraud can rise.

"The fact is that we have all kinds of stand-in documents being called on as identity documents - birth certificates, utility bills - the truth is they don’t prove identity. It is in this situation we have this growing problem."

Later a Home Office spokeswoman said that the Dutch company's success in decrypting a prototype Dutch passport did not mean that UK biometric passports would be similarly vulnerable.

"It fails to mention that the Dutch biometric passport was a test system that was still under development and that the key to cracking the system was the lack of sophistication in allocating passport document numbers, which is not the case with UK passports," said the spokeswoman.

"Information in the e-passport, which the UK Passport Service will start to issue later this year, will be protected using an international standard."

Mr Burnham added: "The thing about the biometric is people can only register one identity and one of the points about identity fraud is people can and do register multiple identities.

"And that supports a range of criminality right across the piece, from money laundering right the way through to terrorism. That is the problem we have to bear down on."

The introduction of "chip and pin" credit cards with Pin numbers - which become compulsory replacements for signatures from February 14 - is credited with cutting the fraud associated with lost, stolen or counterfeit cards by £36 million from January to June last year, or 29 per cent compared with the same period in 2004.

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