The card, due for release in November, will be the first of its kind in the UK, although both American Express and Discover have launched similar initiatives in the US.
Cahoot customers will need to download a small application that can be turned into an icon for the desktop. The application will then generate a random credit card number, that cannot be used again, every time the user undertakes an online transaction.
"Users will be able to shop anywhere on the Net, without ever revealing their own credit card number," explained Tim Sawyer, marketing and business development manager at Cahoot. "The merchant will not have to do anything - as far as they are concerned it is just another credit card transaction."
Graham Taylor, vice-president at analyst group Gartner 2, said smaller businesses had most to gain from the development.
"A significant amount of people do not buy online because they do not want to reveal credit card details," he said. "Big organisations with reputable Web sites do not suffer as much, but with smaller companies people do not know them well enough to trust them."