The firm which lost a computer memory stick containing the details of thousands of criminals was stripped of its £1.5 million government contract today by Home Secretary Jacqui Smith.

The decision to sack PA Consulting, which is also helping ministers over preparations for ID cards, follows an internal inquiry which found that it had breached the rules of its contract by transferring the confidential data onto an unencrypted memory stick.

The stick, containing details of 84,000 prisoners and 10,000 prolific offenders, was lost by an employee and has yet to be found, prompting fears of possible compensation claims and security problems.

Ms Smith said PA Consulting's failure was unacceptable and added that she would review all other contracts involving the firm, worth a total of £8 million.

Ms Smith said: "Our investigation has demonstrated that, while the information was transmitted in an appropriately secure way to PA Consulting and fed to a secure site, it was subsequently downloaded onto an insecure data stick and that data stick was then lost.

"Our contract stipulated the sort of security provisions that needed to be in place and that had not happened. I think PA Consulting recognise that what they have done is against the terms of their contract."

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