The mass of personal information on government databases must be protected or public trust will be damaged, ministers are being warned.
Richard Thomas says he is horrified at the scale of the problem
Information Commissioner Richard Thomas says getting details wrong or mixing them up has huge costs to the people concerned, government and businesses.
Details should not be shared just because technology allows it, he says.
His words come as ministers vowed to press ahead with the ID cards database, which has been called "unprecedented".
Mr Thomas, who is publishing his annual report, has previously warned of the need to avoid a "surveillance society" and is in charge of policing the data protection laws.
Experts estimate that information about the average working adult in the UK is stored on 700 databases.
They include information about people's health records, credit checks and household details.
"Never before has the threat of intrusion to people's privacy been such a risk," said Mr Thomas.
He said many databases were being used to good effect - such as systems for renewing car tax online rather than waiting in Post Office queues.
But there can be problems, such as when the Criminal Records' Bureau mistakenly labelled thousands of people as criminals.
Data protection laws have sometimes been blamed for causing problems in high profile cases - as happened in the Soham murder investigation.
But inquiries have said the real problem is often misunderstanding of the rules.
Mr Thomas told BBC News: "We don't want to go from saying you cannot do anything because of data protection to the other extreme where all information is shared from one database to another with more and more people having access to the information."
The handling of personal information ranks level with the health service among public concerns, according to research for the watchdog.
There were severe consequences if people if information on database was out-of-date, inaccurate, or given to the wrong people, he said.
He pointed to the case of a father investigated by social services after his young daughter said he had "bonked" her - it turned out he had hit her on the head with an inflatable hammer.
While social services had closed the file, police and health authority records were not updated and said the man had been suspected of child abuse.
"If somebody wrongly is associated with a criminal record their career can be seriously damaged," said Mr Thomas.
"If someone is wrongly associated with other sorts of behaviour then their families or relationships could be put at risk."
But government agencies and businesses would also suffer from mistakes, he said.
He pointed to how millions of pounds had been lost in tax credit fraud after misuse of thousands of employees identities.
Mr Thomas refused to comment on whether he thought confidence in the ID cards database would be torpedoed if there were problems with other databases.
"There is a general risk that if there is sloppy handling of personal information that will damage the organisation guilty of sloppy handling," he said.
He said he would be working to make sure the ID scheme, which is facing possible delay, "takes account of data protection concerns" as it is implemented.
Mr Thomas "questioned the sense" of the child index, a database being compiled of all children in England in the wake of the Victoria Climbie inquiry.
Having a register of all children considered to be at risk would be more proportionate, he said, promising to work with the government to build safeguards into the system.