The Department for Work and Pensions is to change the way it stores employees' information after investigating whether a major tax credit fraud involved a breach of its IT systems.
The department said 2,700 fraudulent tax credit claims had been made using stolen data from 6,800 employee records.
The Public and Commercial Services Union was told that paper-based appraisal records, which contained national insurance numbers, dates of birth and names, were used to steal the information.
"Management is looking to ensure those three bits of information are not held together," the union said.
Paul Carratu, managing director at corporate investigator Carratu International, said, "I cannot believe the Department for Work and Pensions has not already separated the national insurance numbers from other means of identifying people."
The Department for Work and Pensions' investigation cleared its systems of involvement in the tax credit fraud.