The government's Gateway project, the police national computer (PNC) system, and data retention proposals have come under fire in the Information Commission's annual data-protection report.

Information Commissioner Elizabeth France says government department cross-referencing of citizens' personal data raises serious questions about how data is collected and used.

"It is possible to check all applications for taxi licences against all applications for benefit, to identify all possible cases of error and to automatically rank cases in order of the likelihood of fraud," said France.

"Not only does this raise questions about whether the 'quality' of the data is sufficient to support the conclusions drawn, but raises questions about its transparency."

Delays in updating criminal records in the PNC could affect the accuracy of disclosures by the Criminal Records Bureau, claims the report.

Disclosures of prior criminal convictions can be used in employment decisions but lapse after 10 years.

"There is a risk that details of actual convictions may not appear and that successful appeals against conviction may not be taken into account.

"We are keeping this matter under close scrutiny," said the commissioner.

France criticised EU and law enforcement proposals to force internet service providers to retain traffic data for seven years.

"We must ensure the measures in place are a proportionate response to the problem the law enforcement agencies face.

"It's hard to see the case for imposing a requirement on telecommunications providers to retain all traffic data for a period of seven years," she added.