The ID cards could cost £1bn to introduce
Home Secretary David Blunkett is asking for feedback on the cards, which holders would not be obliged to carry.
It is suggested they would be used to clamp down on fraud by checking rights to receive NHS treatment, education and state benefits.
Although it would be compulsory to possess a card, Mr Blunkett stressed it would not be mandatory for holders to carry it.
BBC Political Editor Andrew Marr said legislation on the cards might be expected towards the end of this year or early in 2003.
Civil Rights group Liberty told BBC News Online it would oppose the plans, which follow the introduction of identity cards for asylum seekers last week.
Many arguments
Outlining the scheme Mr Blunkett said: "We have made it clear that the introduction of an entitlement card would be a major step and that we will not proceed without consulting widely and considering all the views expressed very carefully.
"There are many arguments - both philosophical and practical - for and against a scheme."
Former Labour Home Office Minister Mike O'Brien argues introducing ID cards, which he believes could be easily forged, would cost £1bn.
Mr O'Brien believes the money would be better spent on policing.
He told BBC One's Ten O'Clock News: "The whole idea of ID cards at a cost of over £1bn is unwieldy and too expensive.
"There are better ways of reducing crime."
Home Affairs Minister Angela Eagle said the cards might worry some people but would offer advantages.
"It's important to be able to establish identity quickly.
"It may be very convenient if entitlement cards allow quicker access both to financial services in the private sector and state public services.
"The disadvantatages may be that people feel there's too much information around that they feel they are being watched."
Identity fraud
Mr Blunkett said the main use of the cards would be to demonstrate what entitlement people have to state services, not to identify them.
His spokesman said: "We're not interested in just having another form of ID because people already have a passport or driving licence."
It is thought the system could also make it easier for banks to cut down on identity fraud, such as credit card crime or bogus benefit claims.
But Liberty's campaigns director Mark Littlewood called on the government to look at alternative ways of tackling identity fraud.
Rejecting the idea that people would not be forced into carrying the cards, he said: "If it's going to be necessary to have one to access all types of service it is, for all intents and purposes, compulsory."
Liberal Democrat home affairs spokesman Simon said the party also opposed the idea of identity cards which could become "show on demand".
But the spokesman insisted: "We're not going to have apartheid-style stop and search as part of this.
Early feedback hopes
"The government has already said that is not an option."
Although a consultation paper could be published by the government in the spring or summer, Mr Blunkett wants feedback before that.
The government hopes entitlement cards will pay for themselves, by cutting the cost of fraud.
It is thought they would be based on the Applicant Registration Cards (ARC), launched for all new asylum seekers last week.