A CROSS-BORDER spat erupted last night over new Home Office plans for compulsory ID cards in Scotland.

The Sunday Herald can reveal that the UK government is considering fast-tracking the project by using the micro-chipped bus passes held by more than a million Scots. Whitehall officials have set up a working group which will look at how to piggyback the National Identity Register (NIR) on to the Executive's entitlement card scheme.

Last night the Scottish government claimed it had been excluded from crucial discussions and warned that any data-grab attempt would be illegal.

Around one in four Scots already own one of the smartcards, currently used only for concessionary fares and access to leisure services. But Home Office interest was sparked by a report which suggested the passes could "deliver the government's goals ... quickly and perhaps at reasonable cost".

The influential London think-tank New Local Government Network (NLGN) also claimed the cards could soon be ready for use to document citizens' mental health and their "reporting a crime, attending an accident and emergency department or claiming benefits".

The revelation will spark fury among ministers at Holyrood who have vowed not to link devolved public services to ID cards, a position agreed with former home secretary Charles Clarke.

Green MSP Patrick Harvie said: "It's no great surprise that there are folk down south who see the entitlement card as an opportunity. Unfortunately, just because the majority of MSPs have never wanted to go down this route doesn't mean Scotland won't be dragged there eventually."

Plans to use entitlement cards as a platform for the NIR were outlined in a NLGN report entitled Local Identity. It states that, since the Identity Cards Act became law last year, "the government has had to scale back plans for the NIR due to budgetary constraints and is exploring alternative systems. We believe that a local, council-administered scheme could be more practical, possibly cheaper, and quicker."

Last night an NLGN spokesman said the report's recommendations had sparked "interest" at the Home Office. Asked if ministers would now be considering the role of entitlement cards, he revealed: "The Identity and Passport Service is working closely with local authorities and the Local Government Association to ensure that the National Identity Scheme is designed to deliver benefits that matter for local services."

He added that the Scottish government had been asked to attend the working party's first meeting in August and a second planned for next month. But a Scottish government spokesman insisted: "We have not been invited to the November 5 meeting of the local government advisory panel. We were not present at the meeting in August."

He added: "The Entitlement Card system has been designed to ensure that all data is handled in accordance with the Data Protection Act. Each local authority acts as the data controller for its own residents.

"Accredited local authority and passenger transport staff have secure access to the system. No-one else has access. This information could not be passed to the Home Office."

The ID Cards Act forbids their mandatory use in the provision of free public services. In 2004, home secretary Charles Clarke assured Westminster that "the system in Scotland will decide how the cards would be used for access to services there. That decision will be made by the Scottish parliament."

The Scottish smartcards have already provoked controversy since they were launched as a bus pass for pensioners and the disabled in 2006. Each micro-chipped piece of plastic is linked to a Citizen's Account, a computerised register which provides an index to every public service used by the holder.

Geraint Bevan, spokesman for No2ID Scotland, said: "We have been proved right: entitlement cards are nothing more than ID cards by another name. The SNP ... have to realise that when they won the election they inherited an unfolding Labour plan to introduce ID cards by stealth."

Last year Holyrood passed a law, known as Section 57, which allows the state to use Citizen's Accounts to hoard information about Scots on an astonishing scale. Data on everything from debt to shopping to sexuality could be legally procured, stored and passed on. Critics are fighting to have the law repealed.