There should be more checks on the use of information collected through supermarket loyalty cards, Home Secretary David Blunkett has suggested.
Mr Blunkett is putting his reputation on the line
In a speech, Mr Blunkett said the cards produced key details about people's shopping habits but were accepted because they were run by private firms.
People should not distrust ID cards because they are a state idea, he said.
But the loyalty card firm Mr Blunkett used to illustrate his point described the comparison as "pretty extreme".
In a speech to the Institute for Public Policy Research, Mr Blunkett ridiculed a newspaper story which had suggested the compulsory ID cards could allow the government to track how everybody shopped.
Holding up a Nectar card, he said people voluntarily signed up to allow such details to be collected through such loyalty cards by private firms.
"There is a real issue about how that should be overseen and supervised," said Mr Blunkett.
He suggested broadening the debate about the "very limited access to and use of information in terms of ID cards" to look at protecting privacy in such cases.
"It is a really good opportunity now to start debating what is known about us, by whom, who supervises and oversees it and how we can get a grip on it," he said.
The minister challenged the idea that if government was proposing something like ID cards it must be "inherently wrong" and would lead to "oppression" while whatever private firms knew about people was regarded as perfectly legitimate.
Mr Blunkett later said he had no loyalty cards himself and had borrowed the Nectar card to illustrate his point.
On the Home Office website the home secretary is quoted as saying loyalty cards can be used to show the size of households, eating habits, whether people worked and what toothpaste they used.
But Loyalty Management UK (LMUK), which runs Nectar, accused Mr Blunkett of making "blatantly inaccurate" claims.
Chief executive Rob Gierkink told BBC News the company did not pool information about specific purchases and only held details such as the total amount spent when a card was used.
"We do not know what toothpaste people use, nor do we want to," he said.
Individual retailers in the scheme could determine what items were bought in their stores, he said, but it was not shared with other companies.
Protesters burnt giant mock ID cards to greet Mr Blunkett
Brian Sinclair, LMUK's client services director, said he was surprised Mr Blunkett had linked voluntary store loyalty cards to mandatory ID cards.
"He seems to have missed the point of consumer choice," he argued.
Customers with complaints about information collected in loyalty card schemes can currently go to the information commissioner.
Protesters from campaign group NO2ID greeted Mr Blunkett as he arrived for the speech by burning an ID card bearing his photo.
Organiser Mark Littlewood said: "It's not hysterical to be talking about an Orwellian society and a total
"We are all extremely concerned that the government is establishing an
enormous database on all 60 million of us which will link together a vast amount
of information on us."
But Mr Blunkett suggested the group's stunt would push up public support for ID cards from its current level of 80%, according to opinion polls.
Mr Blunkett said the ID card plan added little costs to what was already being done in creating a database for passports holding biometric details such as iris scans and fingerprints.
Such a database would prevent people travelling to America having to pay $100 on every visit for a biometric visa, he suggested.
The cards were not a panacea for everything but could help stop terrorists using multiple identities, clamp down on illegal working and ensure people from overseas did not get free NHS treatment without being entitled to it, he said.
Mr Blunkett promised a watchdog would keep tabs on the information put on the new database and on who was allowed to access the details.
The scheme would be worthwhile if it reinforced identity and citizenship, he said. If not, he would "be remembered as one of the biggest political failures that Britain has ever produced".