USB keys are fast replacing the floppy disc as the ubiquitous way to transfer data, but these small, easily lost devices can pose a security risk.

Manufacturers have started to address this, and more secure keys are now coming onto the market making use of a variety of security devices.

"When you think about it you can have all the encryption you like on your laptop but if you're moving unencrypted data from it you're vulnerable," said Glen Slade, chief executive of StegoStik.

The company is targeting corporate users with a pen drive that uses steganography, which hides one form of data within another.

Each key comes full of random data and the user's files are encrypted into it using 128-bit Advanced Encryption Standard encryption. A 64MB key costs £44 and sizes up to 2GB are available.

Taking another approach are companies such as AKT Technologies and Memory Experts International, who are using small fingerprint readers to ensure that only individual users can access and transfer data.

Rachel Power, analyst at Canalys, commented: "If you are passing around important documents, having them encrypted makes sense. But I don't think many companies will pay too much of a price premium for them."