Recent admissions that up to 13 London councils have lost public data have led to calls that new legislation is needed to rectify the situation.

Many believe that IT services need to be "smarter" by introducing data classification technology which can help identify sensitive information, according to a report on itweek.co.uk

An announcement from Kensington and Chelsea council stated that there have been two cases of social workers losing files in bars in the last year.

Speaking to the website, Devin Redmond, senior director of product management at Websense, said: "There is frequently a gap in the understanding of what sensitive data is and where sensitive data resides. You then need to look at how it is used and what policies are in place governing that."

The Local Government Association (LGA) is working on new data protection guidelines, however a spokesman commented that there were no systematic problems and it was not possible to legislate for those who did not follow the rules.

This latest call for legislation and increased data back-up follows last year's high-profile government announcement that 25 million HM Revenue and Customs records had been lost.

A recent Connect survey found that the two major concerns about outsourcing services like IT support were 'loss of control' (56 per cent) and 'budget over-runs' (43 per cent).