Online registration for the programme, which launched with a £40m advertising campaign last Monday, was suspended late last week, after a customer found that he was able to view another person's details on the Nectar Web site.
A spokeswoman for Loyalty Management UK, the company that is running the scheme, said, "We have taken the registration part of the site down because of continued problems with the encrypted areas. The decision has been taken to update that part of the site, rather than to disappoint customers with slow service."
The security breach was not the only IT problem that Nectar, which hopes to sign up 50% of UK households within the first year, suffered last week.
Thousands of users were unable access the www.nectar.com site, because Loyalty Management's Sun servers could not cope with the high demand. "We have been absolutely gobsmacked by the demand," the company spokeswoman said.
Nectar's difficult launch demonstrates how the performance of IT systems can have a direct impact on company branding - a critical business commodity.
Richard Hammond, managing director of advertising agency Spirit, said Nectar could suffer lasting damage to its brand because the first few days after launch are key to a new brand's image.
"Brands are a partnership between supplier and consumer based on a relationship of trust. This relationship is even more fragile at launch phase, where consumers are most sceptical," he explained. "People have it drummed into them that first impressions count, and it should be natural for brand managers to take every measure to ensure that the first point of contact is impeccable."
The problems suffered by the Nectar Web site have also affected the time it takes to transfer loyalty points to the new service. Barclaycard is telling card holders that transferring points to Nectar - a process which should take three days - could take up to 28 days, a spokeswoman for the credit card firm confirmed.
Loyalty Management's spokeswoman said the firm's IT team is continuing to work to increase the server capacity and to update the encrypted area of the site.