Hundreds of innocent people have been branded as criminals by the government agency set up to vet people working with children, it became clear last night.

People applying to take up jobs as teachers, nurses, childminders and even those volunteering to work with youth groups are likely to have been among those falsely accused of wrongdoing by the Criminal Records Bureau (CRB).

They face career problems or being stigmatised by their communities. They must also go through an appeals process to clear their names.

The CRB, a Home Office agency, was set up to vet those working with children or vulnerable people. It checks on criminal convictions, cautions and reprimands, while an enhanced check examines any other "relevant and proportionate'' information held by the police.

However, figures seen by The Daily Telegraph show that in the year to February 2008, 680 people were issued with incorrect information on their background checks by the CRB. The disclosure is likely to deter many from applying for positions that require scrutiny.

The agency wrongly found that hundreds of people had criminal records or in other cases mistakenly gave a clean bill of health.

The CRB, which is plagued by delays and mistakes that jeopardise its efficiency, is the latest government agency to face questions over its handling of sensitive personal data.

Ministers plan a big increase in the number of criminal records checks carried out on members of the public. The number processed annually by the CRB has risen from 1.5 million in 2002 to almost three million over the past year.

More than 11 million adults - one in four of the adult population of England - will have to be vetted and registered on the authority's database.

The Tories said that stopping innocent people working with children was "completely unacceptable'' and that the CRB needed an urgent overhaul. It has also emerged that:

* More than 50,000 people requiring detailed "enhanced checks'' because they work unsupervised with children had to wait more than two months for their applications to be processed;

* CRB forms are so complicated that 240,000 applications are wrongly filled in by organisations confused by them;

* The system is so inflexible that thousands of people need multiple CRB checks for different jobs because the checks are not transferable;

* The agency's 450 staff took a total of more than 5,000 days off sick last year.

David Ruffley , a shadow Home Office minister, said: "There were almost 700 mistakes that could ruin people's lives. That is 700 too many. There is an emerging crisis of public confidence in the handling of this public information. These appalling delays are unacceptable, causing havoc for organisations desperate to take on volunteers or employees.

"They are compounded by the CRB sick-note culture. The CRB lost 5,506 days to sickness ... a staggering 1,000 lost working weeks a year.

"Jacqui Smith [the Home Secretary] is responsible for this incompetence, mismanagement and delay. She seems incapable of getting a grip.''

Campaigners said the situation would be worse next year when it will become illegal not to pass on suspicions about people at institutions that work with children.

Josie Appleton, of the campaigning Manifesto Club, said: "This is shocking but not surprising. More and more tittle-tattle will end up at police stations. It is part of the paranoia about child protection where every accusation sticks.''

The Home Office admitted last night that mistakenly

branding innocent people as criminals was "regrettable''. A CRB spokesman said: "The first priority is to help protect children and vulnerable adults, and we will always err on the side of caution to help ensure the safety of these groups.

"Since 2004 the CRB has stopped 80,000 unsuitable people working with vulnerable groups with a disclosure accuracy of 99.98 per cent. The CRB is acknowledged as an improvement on previous checking arrangements, although checks which do not correctly reveal a person's true criminal record are still clearly regrettable - even if they do represent a tiny proportion of all CRB checks.''

Organisations can apply for a CRB check on successful job applicants. A copy is sent to the applicant and the organisation. Anyone wrongly labelled on a check can appeal, with nine out of 10 cases resolved within three weeks.