The importance of strong IT security and tight encryption systems has again been attested to after authorities at Newcastle City Council realised that they had accidentally released private details of up to 54,000 people on to the internet.

The mistake was found after council officials hired an independent security expert to test their IT systems. That expert found that thousands of credit and debit card transaction details from payments made by local residents between February 2006 and April this year had been accessible to foreign computers after being placed on an insecure server.

The payments compromised included those for council tax, business rates, parking fines and rents, though the council has said that no PIN numbers were released and that highly-sophisticated encryption technology would be needed to access the information.

Council chief executive Ian Stratford commented: "We are now fully confident that our systems are properly robust, so we are continuing to receive payments by credit and debit cards.

"We very much regret that this situation has developed, although we would again stress that there has been no indication of any fraud or loss, and that we spotted this situation through the thoroughness of our own security and checking systems."

Local residents have been urged to closely watch their future bank statements for any attempted fraud.

In a recent survey of SMEs for Connect, the two most important benefits of outsourcing were 'guaranteed response times' and 'allowing in-house IT staff to concentrate on more strategic issues'