The government is working with the private sector to determine how ID cards for a range of commercial transactions.

If adopted, the plan would create a central audit trail of every citizen's major transactions with both government and business.

The proposals are revealed in the Regulatory Impact Assessment, a document accompanying the ID cards Bill published this week. It says the Bill allows for the national identity register (NIR) to record when and from whom any checks on the database take place.

According to the document, typical uses could include:

• Banks and other finance firms for combating money laundering and identity fraud
• Employers to check a job applicant's immigration status
• Retailers to help protect against credit card fraud

As part of the proposals, Whitehall is also evaluating the possibility of using a future generation of chip-and-PIN readers for checking ID cards at point-of-sale.

The Home Office says the use of ID cards will ensure security and consistency and make the system easier to understand and to operate.

'We are proposing to make online checks against the register the norm, except in those low risk/low value cases where a visual check is judged to be sufficient,' said a spokesman.

Mike Rodd, external relations director at the British Computer Society, says the proposals go far beyond what was ever intended for ID cards.

'The potential to connect and collate information about people that may be commercially sensitive will make the population at large very unhappy,' he said.

'To create this huge database of information starts smacking of some sort of authoritarian state. This could really cause an outrage.'

Professor Jim Norton, a senior policy advisor at the Institute of Directors, says the government would be inundated with data.

'Recording every high value transaction doesn't sound like a great idea to me,' he said.

'The idea of having a huge database and sucking vast amounts of information into it seems to me to be remarkably na‹ve on one hand and a potential major burden on business on the other.'