The government is to extend a pilot project sharing individuals' personal data between the Department of Work and Pensions (DWP), HM Revenue and Customs (HMRC) and local authorities.
New legislation to increase data sharing powers between government departments and other public agencies has been repeatedly promised by ministers, sparking controversy among opposition parties and privacy campaigners.
The government argues that greater data sharing will improve public services by reducing the amount of form filling for individuals.
The pilot scheme running between October 2006 and February this year linked the DWP, HMRC and North Tyneside council in a bid to speed up the processing of benefits and tax credits to residents in the area.
During the trial, the time taken to get all benefits into payment when an individual in North Tyneside had lost their job was halved, the DWP said. Unnecessary tax credit payments were stopped more quickly, while claimants for working tax credits were "switched into" the system more quickly when they started work, the department added.
Work and pensions minister John Hutton has now announced plans to extend the pilot to six other local authorities, mainly in cities where there are large numbers of people in receipt of benefits and tax credits.
The six authorities have not been named as they have not yet confirmed participation in the scheme.
Information commissioner Richard Thomas has urged a cautious approach to data sharing, although he has stopped short of opposing government proposals to amend the data protection laws.
Last month, he told public bodies they must carry out an analysis of risks and benefits to individuals and society before sharing personal data between agencies.
A DWP spokesperson said the department would make findings from the pilot scheme available to the information commissioner "if he wants to see it".
John Hutton said: "Our customers who experienced the trial have told us that a fast and effective process for getting all of their benefits and credits resolved would encourage them to take up employment. And that is why we will test this way of working in some more areas before we consider introducing it nationally."