The government is to create a special watchdog to oversee the confidentiality and integrity of data held on the planned national identity register that forms a key part of its £5.3 billion ID cards plan.

Home office minister Liam Byrne announced the move in a speech that also counterposed the national register to a dangerous "laissez faire" approach that allowed numerous identity authentication systems introduced by the private and public sectors to proliferate.

Byrne said the IT systems holding the national identity register would be fully accredited by the government's security authorities.

The national register would "set new standards for best practice in protecting document, physical, staff and building security," he told a London conference on identity management.

A strategic action plan published by the government in December presented a slimmed down vision of the plan, abandoning moves to create a dedicated national identity register database in favour of using existing government databases

But the minister implicitly acknowledged public and political controversy over the ID register, saying parliamentary scrutiny of the ID plan should be beefed up. "A system created to build public trust must be overseen by something trusted by the public. That is why I believe we should examine whether parliamentary oversight can be strengthened further."

He added: "A national identity scheme commissioner will be appointed to oversee the operation of the scheme and report annually on the uses to which ID cards are put and the confidentiality and integrity of information recorded in the register."

Byrne's speech outlined potential new uses of the register putting it forward as an alternative to a chaotic "public and private laissez faire" approach, where businesses produced myriad identity authentication systems for their customers.

Citing examples such as US retailers introducing biometric systems at checkout tills and manufacturers' use of fingerprint technology to deter theft of consumer goods, the minister warned that these systems were unregulated "because today no safeguards are really required or enforced."

Byrne – who failed to mention the Data Protection Act, which puts duties on organisations holding or handling individuals' data – asked: "Who exactly would have your details? Who could they pass on or sell your information to? What could they do with your fingerprints?"

He added: "With low security standards laissez-faire schemes would continue to lay the public wide open to identity theft."

The "sheer complexity of the systems" would make it difficult for individuals to correct inaccuracies, while the proliferation "plastic, passwords and PIN" would be uneconomic.

"If we persist with this, it is frankly easy to see how, before long in Britain, the day will come when we have a mish-mash of unregulated, potentially unsafe systems, mushrooming in growth and size in a way that is just uneconomic," he warned.

Instead, Byrne argued that the ID cards plan offered "a publicly accountable, national solution" that would in time become part of the critical national infrastructure.

But a move to "multiply the uses" of the identity register meant the government should "look hard at how the commissioner or parliament is involved – more dynamically than an annual report," the minister said.