The Government should launch a "serious renewed debate" on ID cards or scrap the scheme, a thinktank report has said.
Researchers from Demos warned that the identity card project was launched without adequate public engagement, and said more consideration should be given to what information the cards carry and how they will be used.
The call came in a report entitled The New Politics of Personal Information, which found that the average economically-active British adult now has details recorded on 700 databases.
Researchers Peter Bradwell and Niamh Gallagher found that the modern public, far from resisting Big Brother-style surveillance, were largely happy to share their personal information through social networking websites, supermarket loyalty schemes, public transport swipe-cards and CCTV cameras.
But they said people were gradually becoming more uneasy about the consequences of losing control of their personal data and called on the Government to act to ensure greater protection.
Each official department using citizens' personal information should say how and why they are accessing it, and public authorities should handle individuals' details with the same discipline and care as they have traditionally handled cash, they said.
Banks could have an insurance-type "no-claims" bonus for people who successfully protect their own identity from fraudsters, the report proposed.
The recommendations come less than a month after HM Revenue and Customs lost two computer discs containing the data of 25 million people and amid growing fears people using the internet are leaving themselves wide open to identity fraud.
In the wake of the security breach, Prime Minister Gordon Brown announced checks on the handling of data by every Government department and agency.
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He also pledged that new powers would be given to Information Commissioner Richard Thomas to enable spot-checks on public bodies holding personal information.
