A proposal to include a PIN with each identity card would make it easier and cheaper for firms to use the system

In a move that could make it far easier for firms to take advantage of the government's controversial ID card scheme, Home Office minister Andy Burnham has confirmed that the cards could be issued with PINs.

Such a move would mean firms and public sector agencies may not have to implement expensive biometric scanners to verify customers and employees' identities, dramatically lowering the cost of the scheme.

"A PIN number would be a new intermediate way of checking a card was authentic," Burnham said. "The verification services that could be offered would be applied appropriately according to the business process that was involved."

Chip and PIN technology in the cards would allow them to be used with many more applications. For example, online businesses that would balk at the prospect of implementing biometric scanners on every customer’s PC could use PINs to verify customer identities and even enable digital signatures.

However, critics have argued that such a move would make the cards no more secure than current bank cards, undermining government claims that the cards will help to tackle fraud.

Burnham maintained that for high-value transactions, organisations could still use biometric checks as a more secure means of verification.

Meanwhile, the government has threatened to use the Parliament Act to force through the ID card bill without approval from the Lords as peers last night again rejected the bill in its current form.

Peers voted by a majority of 35 against requiring passport applicants to have their biometric details entered on the national ID card register. They argued that this requirement would go against the government's manifesto commitments that ID cards would be initially voluntary.