The ID card commissioner will be given stronger powers by the government, in an attempt to convince the public their data will be safe under the scheme.
She said the watchdog will scrutinise the way the scheme is implemented and managed, how information is stored and how ID cards are used by organisations, and will work closely with the Information Commissioner.
Smith announced that UK citizens who want to will be able to pre-register for the cards in the first few months of next year.
Manchester Airport and London City Airport will be the first to trial compulsory cards for their workers. They will take part in 18-month trials starting autumn 2009.
But the No2ID campaign group said this was a "climbdown" from original plans which looked at enrolling 200,000 airport workers.
Three suppliers have been short-listed for the contract for the application and enrolment processes. Two suppliers were short-listed for the contract to replace existing biometric storage and matching systems. These will both be awarded in the first quarter of 2009, Smith said.
The estimated cost of the scheme has fallen from £5.3bn in November 2007, to £4.8bn in the most recent cost report, published today.
The first identity cards will be issued to foreign nationals from November 25, with 40,000 expected to be in circulation by April 2009.
From 2010, the cards will be issued on a voluntary basis to young people, and to the rest on the population from 2011/12.