Up to 25 million personal records are feared lost in what is the UK's biggest ever data protection breach.

The massive loss of records relating to government Child Benefit claimants prompted an almost unprecedented Parliamentary statement by the chancellor of the Exchequer, Alistair Darling, and the resignation of the chairman of HM Revenue & Customs, Paul Gray.

According to the BBC, a source at the Child Benefits Agency said that the breach happened when CDs containing the data were lost by a courier travelling between the department’s HQ in Washington, Tyne and Wear, and London.

Included in the 25 million records was information relating to names, national insurance numbers, dates of birth, and bank details for 7.25 million families claiming the benefit for their children.

During his statement, Darling admitted the breach was an "an extremely serious failure", but said there had ben no evidence of suspicious activity that might suggest the files had been compromised by criminals.

It is understood that the government was first notified of the loss ten days ago. It is not clear yet whether the data was encrypted or not, though they were password-protected. Earlier this month, the UK Information Commissioner’s Office (ICO) said that it was considering plans to fine health professionals for losing confidential data.

The news of the loss came on the same day that a CA/You Gov survey revealed a lack of satisfaction by UK consumers in the government's ability to hold on to information.