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The government must develop a new strategy to ensure people's personal information is protected more effectively, a report has said.

According to democracy thinktank Demos, people are becoming increasingly willing to provide personal data in exchange for receiving various services and benefits, but are effectively losing control of their private data.

In an age of online banking and supermarket loyalty schemes, consumers also lack sufficient knowledge about how the personal data they provide to various organisations is used, the study released by the research group warns.

The report, entitled FYI: The New Politics of Personal Information, suggests individuals must take measures themselves to protect their personal data.

It also argues every government department using such information should explain how they are accessing the details and for what purpose.

Demos also calls for a "serious, renewed debate" about the government's controversial identity card scheme, stressing the plans should be abandoned if such consultation does not take place.

"There needs to be more open consideration of what kind of information the cards would hold, why, and in what circumstances they will be used," the report concludes.

"Meaningful engagement with the public about how the technology should work must be foremost in shaping what the cards do, if they are to go ahead," it adds.

The Information Commissioner's Office (ICO) should also be given new powers to audit the way organisations use personal data, Demos says.

In addition, individuals should have greater rights to enable them to access information held about them by private companies.

Meanwhile the organisation's study suggests banks should consider offering a "no claims bonus" to customers who successfully protect their personal details from fraudsters.

The report comes amid growing concern about the security of personal data and the increasing problem of ID fraud.

Last month it emerged HM Revenue and Customs had lost two discs containing the personal details of 25 people.

The missing discs contained sensitive information about all child benefit claimants, including details such as bank account numbers and national insurance data.