Britain's tax and customs service lost banking and personal data of 25 million people -- nearly half the country's population -- when two computer disks disappeared in an internal mail service, the Treasury chief said Tuesday.
Paul Gray, the Revenue and Customs chairman, has resigned over the error, which happened when officials sent the disks to a government audit office.
Treasury chief Alistair Darling said the delivery was not being tracked and was missing for three weeks before any alarm was raised.
The disks contained details on 7.25 million families in Britain claiming child benefit -- a tax-free monthly payment available to everyone with children. The figure represents almost half the families in Britain, and the majority of the country's children. Britain's population is about 60 million.
The information on the disks included the names of parents and children, their addresses, dates of birth, national insurance numbers and banking details.
"I regard this as an extremely serious failure," Darling told lawmakers in the House of Commons.
He insisted there was no evidence the data had fallen into the hand of criminals and said police were involved in the hunt for the missing disks. He said banks had been told to look for signs of suspicious activity.
The opposition Conservative Party home affairs spokesman George Osborne said the government needed to "get a grip and deliver a basic level of competence."
Revenue and Customs is responsible for collecting taxes, distributing some welfare payments and carrying out border checks.
