UK Smart plans to offer free digital signatures to millions of consumers which will allow them to perform online transactions with confidence.
The system will also help to protect business from Internet fraud by creating audit trails for credit card transactions. UK Smart will be liable for any losses due to frauds committed within the system.
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"We're trying to set the standard for digital signatures," said Simon Cook, UK Smart's chief executive.
He said that UK Smart would use the Post Office's certification's authority, Royal Mail Via Code, which is able to confirm an individual's identity.
Once people have been cleared by the Post Office, UK Smart will provide them with software that will allow them to, among other things, buy securely online and have secure e-mail.
To keep the whole process highly secure each consumer will receive a CD-Rom and will set up the applications and Pin on their own computer. UK Smart will never have access to consumers unencrypted personal information.
When customers buy from a Web site they will use their Pin number as a digital signature. They will then receive an e-mailed receipt that will be digitally signed.
This will form an audit trail which will protect businesses from credit card fraud or fickle consumers who back out of a purchase and tell the credit card company not to pay.
Cook said UK Smart was already in talks with various high-street retailers and e-businesses which were interested in adopting the system.