THE Home Office has lost confidential information on every prisoner in the country and more than 40,000 serious criminals causing yet another government data crisis.

It has led to fears that the taxpayer may now face a multi-million pound compensation bill from criminals whose safety may be compromised.

The home addresses of some of Britain's most prolific and serious offenders - including those who have committed violent and sexual crimes - are understood to be among the data missing.

They were on a computer memory stick used by Home Office consultants that has gone missing over the past week. An investigation was started yesterday and the police have been informed.

Home Office officials are in discussions with the Information Commissioner about what steps need to be taken to protect those whose privacy has been jeopardised.

The Commissioner said last night that "searching questions must be answered'' before it decides what further action to take.

The latest data scandal follows the loss of 25million child benefit records last year and details of millions of learner drivers and Army recruits this year.

It is understood that PA Consulting were employed by the Home Office to track and analyse serious and prolific offenders as part of the JTrack programme.

The Home Office sent confidential personal details on the criminals to the consulting company on a secure encrypted email which was then transferred in an unencrypted form onto a computer memory stick. The stick is missing.

The Home Office said that the data included information on 33,000 people who have committed at least six offences in the past year and 10,000 people regarded as "prolific and other priority offenders".

Details of all 84,000 prisoners in England and Wales, including their expected release date and date of home detention curfew, are also on the stick.

In a statement, the Home Office said: "All transfer of data to the external contractor has been suspended pending investigation."

David Ruffley, a shadow Home Office minister, said:"The public will be losing confidence in Jacqui Smith who has failed yet again to tighten security despite a series of data mishandling fiascos. The taxpayer will be outraged if they are made to pick up the bill for compensation."