A contractor working for the Home Office has lost a computer memory stick containing personal details about tens of thousands of criminals.
The Home Office was first told by private firm PA Consulting on Monday that the data might be missing.
The lost data includes details about 10,000 prolific offenders as well as information on all 84,000 prisoners in England and Wales.
The Home Office said a full investigation was being conducted.
They said the police and the Information Commissioner had been informed.
Searching questions must be answered about what safeguards were in place
David Smith, Information Commissioner's Office
The loss is the latest in a string of lost data incidents for the government, including stolen laptops, lost computer discs and memory sticks and files left on trains.
Earlier this month the BBC apologised after a memory stick containing the personal details of hundreds of children who had applied to take part in a TV show was stolen from a vehicle.
On Tuesday a BBC analysis found sensitive data potentially affecting more than four million people had been lost by government departments in the year to April.
Cases included the loss of the National Insurance numbers of 17,000 people and the theft of a laptop with encrypted details of 17,000 Sats markers.
The details of 25 million child benefit claimants vanished last year.
The incident led to the recommendation that government departments should give details of personal data losses.
In this latest case, the contractor confirmed to the Home Office on Tuesday it had failed to uncover the memory stick, but it was not clear how it came to be lost.
The data on the stick also includes information from the Police National Computer of some 30,000 people with six or more convictions in the last year.
Details of serving prisoners included names, addresses, dates of birth and in come cases release dates, said BBC political correspondent Laura Kuenssberg.
The transfer of further data to PA Consulting on the project has been suspended pending the investigation.
David Smith, Deputy Commissioner in the Information Commissioner's Office, said the latest loss showed that personal information could be a "toxic liability" if not handled properly.
"It is deeply worrying that after a number of major data losses and the publication of two government reports on high profile breaches of the Data Protection Act, more personal information has been reported lost," he said.
He added that data protection needed to be taken seriously at all levels and sensitive information, such as prisoner records, held securely at all times.
Mr Smith said: "We expect the Home Office to provide us at the Information Commissioner's Office with a copy of the [internal investigation] report and its findings.
"We will then decide what further action may be appropriate. Searching questions must be answered about what safeguards were in place to protect this information."
Shadow Home Secretary Dominic Grieve said there had been a "massive failure of duty".
He said: "What is more scandalous is that it is not the first time that the government has been shown to be completely incapable of protecting the integrity of highly sensitive data, rendering them unfit to be charged with protecting our safety.
"The British taxpayer will be absolutely outraged if they are made to pick up the bill for compensation to serious criminals."
A spokesman for PA Consulting refused to comment on the data loss at the Home Office.
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