Companies have been advised to take on board lessons from the loss of a CD in the post containing 25 million child benefit records, including bank account details.

The colossal data breach committed by HM Revenue and Customs officials has been described as one of the world's biggest ever failures in information security.

While Chancellor Alistair Darling battles to retain his job in the face of calls for his resignation, business groups have been told to view the incident as a prime example of what can happen when data protection procedures are inadequate.

"Incidents like these illustrate that any system is only as good as its weakest link," said the Information Commissioner, Richard Thomas.

"The alarm bells must now ring in every organisation about the risks of not protecting people's personal information properly."

The potential for firms to suffer a similar breach of their security measures was highlighted by recent research from Dynamic Markets which found that 49 per cent of all employees store potentially sensitive corporate files in multiple locations such as memory sticks and personal hard drives.